Core Issue: The operating account was not reconciled at year-end, leading to unresolved discrepancies.
Impacted Requirements: Monthly bank reconciliations are mandatory, but the transition to new accounting software complicated this process.
Recommended Follow-Up: Implement procedures to ensure monthly reconciliations are completed, with a target completion date of 12/31/2025.
Finding Text
Findings reference number: 2024-003 - Title and AL Number of Federal Program: Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Housing Projects (Sec 223(f)), AL 14.155 - Type of finding: Internal control - Resolution Status: In process. - Population size: N/A - Sample size: N/A - Repeat finding: No - Criteria: Bank accounts should be reconciled on a monthly basis. - Condition: The operating account at year end was not reconciled and had many open items. - Cause: The contract accountant who prepares the in-house financial statements and bank reconciliations was unable to properly prepare the bank reconciliations. The Project also changed their accounting software mid year, leading to a lot of duplication and making the reconciliation process difficult. - Effect: An audit adjustment of a significant amount had to be made to correct the situation. - Noncompliance code: S - Internal control deficiencies - Questioned costs: None - Reporting views of officials: Management agrees with the finding and will make every effort to reconcile bank accounts each month. - Contract number: 114-11392 - Context: This was noted while performing the audit. - Recommendation: Procedures should be implemented to ensure that bank accounts are reconciled on a monthly basis. - Auditors' summary of auditee's comments: They are in agreement. - Completion date: 12/31/2025 - Response: In the future, management will implement procedures to reconcile the bank accounts each month.
Categories
Procurement, Suspension & DebarmentHUD Housing ProgramsReportingInternal Control / Segregation of Duties