Finding Text
S3800-010 Finding Reference Number: 2025-001 S3800-011 Title and CFDA Number of Federal Program: Project-Based Rental Assistance (PBRA) 14.195 S3800-015 Type of Finding: Financial Statement and Federal Award Finding S3800-016 Finding Resolution Status Unresolved S3800-017 Information on Universe Population Size: Utility expenses (electricity) for the period January 1, 2025 through December 31,2025. S3800-018 Sample Size Information: Utility expenses (electricity) for the period January 1, 2025 through December 31, 2025. S3800-019 Identification of Repeat Finding and Finding Reference Number: N/A S3800-020 Criteria: The Project should have an adequate system of internal controls to ensure that all vendor and utility provider transactions are properly processed, paid timely, and properly recorded in the Project's accounting records. S3800-030 Statement of Condition: The Project had not processed nor paid the utility invoices of its electricity provider from March 2025 through March 2026. Unpaid utility and late fee charges totaled $170,391. Electricity continued to be provided to the Project during this time. The Project required an audit adjustment of $121,717 for unrecorded utility expenses (electricity) in order to properly reflect the Project's financial position and results of operations for the year ended December 31, 2025, in accordance with GAAP. S3800-032 Cause: The electric utility provider changed the Project's billing address. Utility invoices did not arrive at the property. The utility provider did not contact Project management to inform of delinquent payments. Internal controls did not detect that utility expenses were understated. S3800-033 Effect or Potential Effect: Delinquent payments to the utility provider could hinder the Project's ability to maintain a safe and operational building for residents. Additionally, incomplete financial information may hinder the overall administration of the Project. S3800-035 Auditor Non-Compliance Code: S – Internal control deficiencies S3800-037 FHA/Contract Number: 085-11073 S3800-040 Questioned Costs: $-- S3800-045 Reporting Views of Responsible Officials: Management acknowledges the finding and is taking corrective actions to address the issue. We do have a process where the manager is to ensure all public utility invoices are received and entered. The manager has a spreadsheet with the public utility accounts, which should ensure the manager receive the invoices. In this instance, the manager did not use the spreadsheet. If the manager doesn’t follow the spreadsheet, it should be caught upon receiving a past due notice or a disconnect notice. Sine Ameren changed the Project's address, we did not receive correspondence. The manager has been informed of the process that should be followed. Ameren called to make payment arrangements and will be waiving the late fees. This will be taken care of upon receiving and reviewing all monthly invoices and making appropriate arrangements. S3800-050 Context: For the year ended December 31, 2025, the Project required a significant audit adjustment in order to properly reflect the Project's financial position and results of operations in accordance with GAAP. S3800-080 Recommendation: The auditor recommends that the Project implement enhanced controls and procedures of its period-end closing process to ensure all proper expense accruals are recorded for invoices not timely received. The auditor also recommends that the Project implement enhanced controls and procedures to identify unreceived and unpaid vendor invoices to prevent potential disruption of services.