Finding Text
Finding 2025-001 – Cash Disbursements and Procurement Material Weakness Condition and Context: Sound, adequate internal controls as well as HUD rules and regulations require adequate accounting and record keeping for all expenditures. During review of disbursements, nine paid invoices could not be located (including one credit card statement with supporting documentation). Criteria: 2 CFR § 200.302 requires records supporting Federal expenditures to be supported by source documentation, and 2 CFR § 200.334 requires financial records and supporting documentation related to Federal awards to be retained for the applicable retention period. Cause: The Authority did not have effective procedures to ensure that complete supporting documentation was retained and readily retrievable after disbursements were processed. Effect: Without adequate supporting documentation, the Authority cannot demonstrate that the expenditures were valid, properly authorized, accurately classified, incurred for an appropriate purposes, or allowable under applicable funding requirements. Because the deficiency affects the Authority’s ability to substantiate recorded expenditures and could allow material errors, unauthorized expenditures, or misappropriation of assets to occur without timely prevention or detection, we consider this deficiency to be a material weakness in internal control over financial reporting. Questioned Cost: Total unsupported disbursements were $64,621. Recommendation: We recommend the Authority implement required documented review and approval by an individual independent of payment preparation, maintain supporting documentation in a centralized electronic records system with routine backups, periodically review disbursement files to verify that documentation is complete and retrievable, contact the applicable vendors and attempt to obtain replacement documentation for the unsupported transactions identified during the audit, and evaluate whether any expenditures that remain unsupported should be repaid to the applicable program.