Finding 1137941 (2024-003)

Criteria: Government Auditing Standards (GAS) requires the auditor to consider whether internal controls over financial reporting provide reasonable assurance of accurate financial reporting and compliance with applicable laws. Additionally, under 2 CFR 200 (Uniform Guidance), disbursements should be supported by authorized invoices or other source documentation to support financial transactions. Condition: During our audit of PHAC’s Manoa Gardens Elderly Housing Project, we noted 2 instances out of 40 samples where the prior property management company was unable to provide sufficient documentation supporting authorization of cash disbursements made during the fiscal year ended June 30, 2024. Cause: The previous property management company did not follow policies and procedures to ensure cash disbursements were properly supported or reviewed by management prior to the disbursement being made. Effect: Maintaining authorized documentation and support of disbursements allows management to prevent, or detect and correct, misstatements and noncompliance on a timely basis with regard to financial reporting and Federal awards, respectively. Identification as a Repeat Finding, if applicable: Not applicable. Recommendation The Organization should monitor entities contracted to manage the project to ascertain that internal control policies and procedures over cash disbursements are operating effectively to ensure support is properly maintained and that authorizations are documented. Views of Responsible Officials and Planned Corrective Action The Organization agrees with the finding and the recommendation. See Part V Corrective Action Plan.