Finding Text
Criteria:Backups for deposits made were not available.Condition:Deposit backups were not available, so the fee accountant had to recreate financial records from the bank statements which included copies of the deposit slips, but these copies were incomplete.Effect:Lack of proper documentation could result in undetected fraud, errors, and incomplete financial information.Cause:Lack of oversight by management and the Board.Recommendation:The Authority should have access to records and reports which include information to show what each deposit was for and who the payments were from.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors' comments, and the following action will be taken to improve the situation. This situation was created when the previous administration removed all records and were not made available to the auditors after several requests. KMHA has taken the following actions.KMHA's Board has approved new written policies and procedures and are in place now.Appropriate staff have begun taking proper safeguards for deposits and bank reconciliations to ensure proper accountability. Bank statements will be provided directly to the Fee Accountant monthly. The reconciliation of all bank accounts in a timely manner is a key component of good controls over cash. The reconciliation of the bank balance with the book balance (i.e., general ledger) is necessary to ensure that:All receipts and disbursements are recorded, which is an essential process for ensuring complete and accurate monthly financial statements;Checks are clearing the bank in a reasonable timeframe;Items reconciled are appropriate and are being recorded;Fraudulent claims can be discovered and investigated; and Reconciled cash balance agrees to the general ledger cash balance.Each bank account will be reconciled by the fee accountant returned. This documentation will be made available to the Authority's auditor.