Finding Text
Criteria Management is responsible for establishing and maintaining effective internal controls over financial reporting to ensure transactions are completely and accurately recorded and supported. Effective controls should include maintaining complete tenant occupancy and billing records, reconciling subsidiary records to the general ledger, and periodically reviewing tenant billing activity to ensure rental revenue and tenant receivable balances are accurately recorded. Condition During audit procedures, the Authority could not provide a tenant rent roll for the period January 1, 2025, through April 30, 2025. For the remainder of the audit period, the Authority provided a tenant rent roll containing tenant names and rent charges; however, it was incomplete and did not reconcile to tenant billing records maintained in the general ledger. The tenant files had these exceptions: • The tenant billing activity was not recorded in the general ledger for two (2) of the twenty (20) tenants sampled from the tenant records. • Three (3) of twenty (20) tenants tested were billed amounts that differed from the amounts supported by tenant rent documentation and HUD Form 50058 records. • The Authority did not maintain formal written policies or procedures requiring the preparation, maintenance, review, or reconciliation of tenant rent roll information to tenant billing records and the general ledger. Although tenant files selected for testing contained supporting HUD Form 50058 documentation, the Authority did not maintain adequate controls to ensure tenant billing information was complete, accurate, and consistently reconciled to accounting records throughout the audit period. Cause The Authority had not established or implemented adequate written policies and procedures to: • Maintain complete tenant rent roll records throughout the year; • Retain tenant rent roll information for all reporting periods; • Reconcile tenant rent rolls to tenant billing records and the general ledger; • Verify billing amounts agree with approved tenant rent calculations; and • Perform documented supervisory review over tenant billing and occupancy records. Effect The lack of complete tenant rent roll records and reconciliation procedures increased the risk that tenant billings, tenant accounts receivable, and rental revenue could be incomplete or inaccurate. As a result: • Certain tenants were not reflected in tenant billing records maintained in the general ledger. • Certain tenant billing amounts differed from approved rent calculations. • Management could not readily demonstrate the completeness and accuracy of tenant billing activity for the entire audit period. • Errors and omissions may not be identified and corrected in a timely manner. Although the identified billing discrepancies were not material to the financial statements, the exceptions indicate that internal controls over tenant billing and related financial reporting were not operating effectively. Questioned Costs None Identified. Repeat Finding No