Finding Text
Criteria: Internal controls over cash management of taxes and insurance escrow account. Condition: Taxes and insurance payments were paid from operating cash account, with no transfer from Escrow account for reimbursement. This resulted in surplus in the tax and insurance account. Context: The condition was noted during our testing over the entity’s accounting records and financial statement reconciliations. Effect: The taxes and insurance escrow account has a surplus, while the operating account reflects a shortage. Cause: Management is not transferring amounts from tax and insurance escrow account to cover costs paid from operating cash account. Recommendation: We recommend management implement policy of transferring funds to operating account from tax and insurance escrow account in a timely manner in keeping with the timing of when tax and insurance expenses are incurred. Views of Responsible Officials and Planned Corrective Actions: Management agrees and will implement policy for timely transfers from tax and insurance escrow account as tax and insurance expenses are incurred and paid from operating account.