Finding Text
FINDING 2022-002 - CASH MANAGEMENT - TYPE: SIGNIFICANT DEFICIENCY - FEDERAL AND
STATE OF NEW JERSEY AWARDS: ALL
Criteria
A cash management plan should be in place to monitor cash flow, current budget projections, debt covenants, and forecast future cash flows timely and accurately to meet statutory requirements.
Condition
The following instances were noted due to a lack of monitoring by the Agency of their cash flow levels timely and accurately:
1) Property taxes and utility payments are consistently paid late, resulting in penalties and accrued interest.
2) Uncollected accounts receivable balances are not monitored and followed up on for timely collection.
3) Significant outstanding checks on bank reconciliations were not timely followed up on.
Cause
Failure to monitor their cash flow and receivables, current budget projections, and forecast future cash flows timely and accurately.
Effect
Potential future and previous failure by the Agency to meet its obligations as they become due.
Identification of a Repeat Finding
This is a repeat finding from the immediate previous audit, 2021-02.
Recommendation
The Agency has implemented a plan to monitor cash flow, create more detailed budgets, and cash flow forecasts, but the plan should be formally adopted and reviewed with management consistently. The Agency has sold properties and cut expenses resulting in positive changes in net assets during 2022 and 2021. Prior to 2020, the Agency had experienced large net operating deficits. These prior year deficits and the noncompliance with statutory requirements have highlighted the need for an effective cash management plan. We recommend management develop and further refine its cash management plan to monitor cash flow and forecast future cash flows timely and accurately to prevent future noncompliance with statutory requirements and avoid unnecessary costs.
Views of Responsible Officials and Planned Corrective Actions
The Agency has reviewed these findings and will strive to adhere to the suggested corrective action plan in this audit report. Additionally, management plans to continue to aggressively implement structural cost-saving measures throughout the Agency.
Identification of a Repeat Finding
This is a repeat finding from the immediate previous audit, 2021-02.