Finding Text
Criteria: HAP project funds may be used only for expenses that are reasonable and necessary to the operation of the project as provided for in the HAP contract. Condition: Internal controls over payables were not implemented to detect that vendor invoices of a related party and of the management agent were recorded to the books of the entity. Context: Vendor expenses incurred by a related party and the management agent were posted to the books of the entity. Effect: Certain expenses were overstated by $31,502. Cause: Lack of attention to the customer name on vendor invoices, as well as review of comparative monthly expenses to detect unusual and/or significant increases. Recommendation: We recommend staff training at the property level to perform monthly review of accounting records on a comparative basis to detect and investigate unusual and/or significant variances. Views of Responsible Officials and Planned Corrective Actions: Management agrees. The Accounting Manager and Executive Director for the year ended June 30, 2025 were terminated in October 2025, and the former Executive Director has returned to assist in implementing necessary controls and processes and train property level staff to perform monthly analysis and investigate unusual and/or significant variances.