Finding 1096353 (2024-002)

Finding 2024-002: Replacement Reserves Material Weakness Special Tests and Provisions Criteria: The Authority should have procedures to account for its replacement reserve monthly and to review for any errors. Condition: The Authority incorrectly handled a replacement reserve transaction for its Section 202 Capital Advance program and did not identify the error for it to be corrected by the fiscal year end. In April, 2024, the Authority was approved to transfer $22,606.44 from the Section 202 Capital Advance replacement reserve to its checking account to pay for capital improvements. In error, the management agent transferred funds of $22,606.44 from another program into the Authority’s replacement reserve. The error was not caught and corrected as of our audit fieldwork date. Cause: The Authority did not have procedures to reconcile approved replacement reserve withdrawals to the bank account and further was not adequately reviewing the account activity to identify errors. Effect or Potential Effect: The Authority deposited funds into its replacement reserve from another program and did not identify the mistake or realize funds were not deposited into the checking account. Recommendation: The Authority should have procedures in place to monitor approved withdrawals and transferred to the correct account and have reconciliation procedures to identify these errors. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.