Finding #2024-002 Deficiency - Internal Controls over Period-End Financial Closing Process of Limited Partnerships Corrective Action Planned ECHC, in its capacity as General Partner, has taken corrective action by terminating the prior property management company and engaging a new property manageme...
Finding #2024-002 Deficiency - Internal Controls over Period-End Financial Closing Process of Limited Partnerships Corrective Action Planned ECHC, in its capacity as General Partner, has taken corrective action by terminating the prior property management company and engaging a new property management company. ECHC will continue to execute and strengthen its oversight controls over the financial closing and reporting process for the Limited Partnerships to ensure complete, accurate, and timely financial information is provided and reviewed. The corrective action plan will include the following steps: 1. Transition to New Property Management Company o Complete on boarding of the new property management company, including communication of ECHC's expectations for financial reporting, internal controls, supporting documentation, and closing timelines. o Confirm that the new property management company understands the required format, content, and timing of monthly submissions. 2. Monthly Reporting Package Deadlines o Require the property management company to provide complete monthly financial reporting packages by an established deadline each month. o Reporting packages will include, as applicable, general ledger detail, trial balance, balance sheet, income statement, bank reconciliations, accounts receivable aging, accounts payable aging, tenant receivable support, cash activity, debt and escrow activity, and supporting documentation for significant or unusual transactions. o ECHC will monitor timely receipt of monthly reporting packages and follow up promptly on late or incomplete submissions. 3. Finance Department Review of General Ledger and Financial Reports o ECHC finance personnel will perform a timely monthly review of the general ledger and financial reports provided by the property management company. o The review will include evaluation of account balances, budget-to-actual fluctuations, unusual transactions, completeness of activity, and consistency with prior periods and known operating activity. o Identified issues will be communicated to the property management company for correction before the monthly close is finalized, where practicable. 4. Review of Key Reconciliations o ECHC will review key reconciliations prepared by the property management company, including bank reconciliations, tenant receivables, accounts payable, security deposits, escrow accounts, intercompany balances, debt balances, and other significant balance sheet accounts. o Reconciliations will be reviewed for completeness, accuracy, timeliness, and support for reconciling items. o Unresolved reconciling items will be tracked and followed up until resolution. 8. Ongoing Monitoring and Oversight o ECHC will monitor the new property management company's performance against established reporting deadlines and quality expectations. o Finance leadership will periodically evaluate whether oversight controls are operating effectively and whether additional controls are needed. o ECHC will maintain documentation of monthly reviews, reconciliations reviewed, issues identified, follow-up performed, and final resolution of exceptions. Management believes these corrective actions will strengthen the period-end financial closing process for the Limited Partnerships, improve the timeliness and accuracy of financial reporting, and reduce the need for post-closing audit adjustments.