Finding Text
Criteria Proper internal controls require that Palmyra Area Inter-faith Housing Council and affiliates maintain accurate financial reporting recording. Statement of Condition During the audit process a material adjustment was needed to correct the allocation of cash, property and equipment, interest rate swap asset and loans payable between Palmyra Area Inter-faith Housing Council and Palmyra Interfaith Manor HUD Project No. 034-EH015. Questioned Costs N/A Effect or Potential Effect The trial balance provided by management was materially misstated. Therefore, there is a reasonable possibility that a material misstatement of the Council’s financial statements or noncompliance that is more than inconsequential will not be prevented or detected by the Council’s internal control. Cause The financial records of Palmyra Inter-faith Housing Council and Palmyra Interfaith Manor HUD Project No. 034-EH015 were combined and not reconciled properly between the two entities. Recommendation We recommend that the financial records of Palmyra Inter-faith Housing Council and Palmyra Interfaith Manor HUD Project No. 034-EH015 be maintained separately and reconciled on a regular basis. Views of Responsible Officials and Planned Corrective Action Management agrees to maintain separate trial balances for the allocation of cash, property and equipment, interest rate swap asset and loans payable between Palmyra Area Interfaith Housing Council and Palmyra Interfaith Manor HUD Project No. 034-EH015. Management notes that this represents a difference of opinion from the prior auditors, who found the financial records of the two entities to be properly reconciled through the use of schedules to separate the council and project’s allocation of cash, property and equipment, interest rate swap asset and loans payable between the Council and the Project for 19 years with no consequence.