Finding Text
Criteria: Under Uniform Guidance (2 CFR 200), entities are required to maintain effective internal control to ensure the proper stewardship of federal awards, including appropriate internal controls over financial reporting for all general partner interests in real estate partnerships and determine the proper accounting under the equity method of accounting. Condition: In preparation for the 2025 audit, the Organization identified that their general partner interests in investment in tax credit real estate partnerships were not properly accounted for which resulted in investment in tax credit real estate partnerships and net assets without donor restrictions were understated by $1,133,583 as of December 31, 2024. Cause: Procedures were not in place so that the complete information for all of the Organization's general partner interests in tax credit real estate partnerships be reviewed to determine accounting for these interest in accordance with the equity method of accounting. Effect: As of December 31, 2024, investment in tax credit real estate partnership and net assets without donor restrictions were understated by $1,133,583. Questioned Costs: None: Recommendation: Procedures should be implemented to assure that all general partner interest in real estate partnerships are properly recorded in the trial balance/general ledger during the monthly financial close and year-end procedures. Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. The Director of Accounting has implemented a new process to track all new investments in tax credit real estate partnerships allowing finance to assess the proper accounting for these using the equity method of accounting.