Finding Text
2023-001 – Segregation of Duties
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program: Supportive Housing for the Elderly (Section 202) Mortgage Financing
Assistance Listing #: 14.157
Questioned Costs: None
Type of Finding: Material Weakness in Internal Control over Compliance
Condition: There is not an ideal segregation of duties among personnel involved in the accounting function. A lack of proper segregation of duties could allow errors or irregularities to occur and go undetected. This condition is inherent in operations which, for sound economic conditions, must function with a small number of office personnel, and correction of this condition would require the employment of additional office personnel. Consequently, corrective action may not be practical.
Criteria or Specific Requirement: A proper segregation of duties is an important component of a system of strong internal controls and should be implemented, if possible.
Cause: For sound economic reasons, the Project and the management company must function with a small number of office personnel, and correction of this condition would require the employment of additional office personnel. Consequently, corrective action may not be practical.
Effect: A lack of segregation of duties increases the risk that errors or fraud may occur and not be prevented or detected on a timely basis.
Repeat Finding: Yes, prior year finding 2022-001
Recommendation: When this condition exists, management’s and the board’s close supervision and review of accounting information are the best means of preventing or detecting errors and irregularities.
Views of Responsible Officials and Planned Corrective Actions: We agree and will continue to monitor monthly financial results and accounting information as correction is not practical.