Finding 16019 (2022-003)

Material Weakness
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-09-17

AI Summary

  • Core Issue: There are significant errors in recording real estate and payable accounts, leading to material misstatements in financial statements.
  • Impacted Requirements: Federal funding guidelines require effective monitoring policies to ensure accurate financial reporting.
  • Recommended Follow-Up: Review and correct transactions related to repairs, maintenance, and accrued liabilities; implement a new policy for ongoing oversight of accounting records.

Finding Text

2022-03 (Material Weakness) Criteria: Organizations receiving federal funds are required to have monitoring policies and procedures in place to provide reasonable assurance that material misstatements in the financial statements are detected. Condition: Current year activity in real estate and payable accounts were not properly recorded. Expenditures to improve buildings was erroneously recorded to repairs and depreciation expenses was not recorded. Expenditures invoiced prior to year-end but not yet paid were not properly recorded as accrued liabilities. Context: Deficiency was discovered while performing substantive testing on real estate balances. Effect: Material misstatements in the financial statements were not detected in a timely manner. Cause: Organization has gone through multiple accounting personnel that did not have the knowledge or skills to perform transaction entry into accounting software in prior years and this was not corrected in the current year. Recommendation: The Organization review its transactions for repairs and maintenance and obtain the fixed assets depreciation schedule in order to properly record real estate transactions. The Organization should review its transactions invoiced but not paid prior to year end in order to properly record accrued liabilities. Response: We acknowledge that there is currently not a sufficient process in place to ensure that capital expenditures and accounts payable are properly recorded. A policy will be implemented to review the accounting records to ensure that capital expenditures and accounts payable are properly recorded now that the Organizations has staff and an outsourced accounting firm with the knowledge and skills to fulfill this need.

Corrective Action Plan

2022-03 Recommendation: The Organization review its transactions for repairs and maintenance and obtain the fixed assets depreciation schedule in order to properly record real estate transactions. The Organization should review its transactions invoiced but not paid prior to year-end in order to properly record accrued liabilities. Corrective Action We acknowledge that there is currently not a sufficient process in place Planned: to ensure that capital expenditures and accounts payable are properly recorded. A policy will be implemented to review the accounting records to ensure that capital expenditures and accounts payable are properly recorded now that the Organizations has staff and an outsourced accounting firm with the knowledge and skills to fulfill this need. Implementation This action plan is for the entity to adopt a policy to review repairs and Date: maintenance activity on a regular basis to determine what amounts need to be capitalized as a fixed asset to ensure proper treatment of activity. The entity will adopt a policy to review expenses invoiced but not yet paid to determine what amounts need to be accrued to ensure proper treatment of activity. This will be implemented by the entity by 12/31/23.

Categories

Subrecipient Monitoring Material Weakness

Other Findings in this Audit

  • 16017 2022-001
    Material Weakness Repeat
  • 16018 2022-002
    Material Weakness
  • 16020 2022-004
    Material Weakness
  • 16021 2022-005
    Significant Deficiency
  • 592459 2022-001
    Material Weakness Repeat
  • 592460 2022-002
    Material Weakness
  • 592461 2022-003
    Material Weakness
  • 592462 2022-004
    Material Weakness
  • 592463 2022-005
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.239 Home Investment Partnerships Program $6.44M
21.023 Emergency Rental Assistance Program $2,979