Finding Text
2023-001 Segregation of Duties – Loan Program Significant Deficiency This is a repeat finding. The prior-year’s auditing finding number is 2022-001. Condition: The Housing Authority administers a loan program, referred to internally as the HCRI loan program. The loans are administered and accounted for by finance and management level personnel that also participate in the program, without any additional oversight. Large loan balances are outstanding from finance and management level personnel individuals. Criteria: Management is responsible for administering a loan program, referred to internally as the HCRI loan program. The loans are administered and accounted for by finance and management level personnel. Individuals who benefit from the loan program should not have complete discretion over the approval of loan requests, or the recording of balances and repayments. Cause: Many of the loans go back years and the Housing Authority does not wish to write loan balances off in case tribal members request new loans. Effect: The loan program was not carried out pursuant to sound policies. Providing large balances to a few individuals increases the possibility that the Housing Authority may not receive full payment for advanced amounts. Recommendation: The Housing Authority’s fiscal policies should be revised to ensure that preventive controls are in place over check disbursements for loan disbursements, such that checks must be signed with live signatures at least the signature of one Tribal Council member. Further, individuals who benefit from the loan program should not have complete discretion over recording and processing of advances and repayment. We recommend a complete list of outstanding balances be presented to the Tribal Council, or its designee, for continued monitoring. Views of Responsible Officials: See Corrective Action Plan.