Finding 1075279 (2023-002)

Finding 2023-002 – Accounting Controls – Subsequent Bank Reconciliations Not Completed ALN 14.881 – Noncompliance and Material Weakness Criteria: Regulations at 2 CFR Part 200, Uniform Administrative Requirements, outline the internal control requirements for recipients of federal grant funds. Non-Federal entities must demonstrate, “Effective control over, and accountability for, all funds, property, and other assets.” A deficiency in internal control exists when the design or operation of a control does not allow management or its employees, in the normal course of operation, to detect or correct errors, fraud, or misstatements in a timely manner. The failure to properly implement internal control procedures can result in material misstatements of the account balances and noncompliance with grant oversight provisions. Condition: As of the audit field date, the Authority has failed to complete bank reconciliations for the eight months subsequent to the fiscal year-end. The internal control weaknesses in the bank reconciliation processes described in Finding 2023-001 in addition to the lack of subsequent bank reconciliations presents a high risk that there are undiscovered fraud or material misstatements in the period following year end. Cause and Effect: Failure to properly reconcile and adjust bank reconciliations can result in misstated books and records of account. The lack of oversight over a highly liquid asset also elevates the risk of fraud or misstatement in these accounts. Recommendation: We recommend that the Housing Authority bring all bank reconciliations up to date as soon as possible and on an ongoing basis establish a reconciliation deadline for the accounting department.