Finding Text
Finding No. 2025-001: Financial Reporting (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Supportive Housing for Persons with Disabilities (Section 811) Federal Assistance Listing Number: 14.181 Compliance Requirement: Reporting Statement of condition The lack of appropriate policies, procedures, and internal processes led to inaccurate recording of depreciation, total rental revenue, vacancies, and amounts owed to a related a party. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include levels of review, reconciling accounting records at month-end and year-end close, and maintaining accurate books and records. Cause Management did not have sufficient internal controls in place to accurately report the results of the Organization's operations during the year. Effect Insufficient controls could result in accounting errors and theft. A lack of controls over financial reporting can result in inaccurate filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Identification of repeat finding The finding is a repeat of Finding No. 2024-002. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process