Finding Text
Finding 2022-003--General Oversight--Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Programs: ALN 14.231 ? Emergency Solutions Grant Program Passed Through: New York State Office of Temporary and Disability Assistance City of Troy, New York City of Albany Community Development Agency CARES of NY, Inc. Unity House of Troy, Inc. ALN 14.267 ? Continuum of Care Grant Program Grant Period: Year ended December 31, 2022 Condition: During the year ended December 31, 2022, the Organization fell behind on vouchering and billing of grants which lead to cash flow issues as well as a delay in financial reporting due to lack of oversight of the contracted accounting services. This was identified as a Material Weakness in the December 31, 2021 audit. Criteria: A system of internal controls should be in place, including policies and procedures to ensure that maintenance of detail documentation, provide reasonable assurance transactions are recorded properly, and misstatements are prevented or detected in a timely manner. Management should provide oversight to ensure that the system of controls is being followed. Cause: The Organization relied too heavily on its contracted accounting service and did not provide adequate management oversight in the financial reporting process. Effect: The condition could allow improper recording of program expenses and revenues. For transactions related to federal grants, without proper documentation, costs may be disallowed. Recommendation: We recommend that the Organization create policies and procedures to ensure proper oversight of the financial reporting function. In addition, we would recommend the Organization to consider the costs and benefits of restructuring the finance department. This could include allocating additional resources to hire additional employees, reallocation of responsibilities within the organization and less reliance on the contracted accounting services. View of Responsible Officials and Planned Corrective Actions: The Executive Director has worked with the Director of Grants and Finance to review and revise the agency?s accounting policies and procures. To ensure proper oversight, all procedures and reports will be reviewed by the Board?s Finance Committee, followed by a final review and approval of the Full Board of Directors of Joseph?s House & Shelter. Beginning in Q1 2022, agency leadership took necessary action to begin restructuring the Finance Department following a change in staffing with the contracted accounting service. In Q2 2022, the agency promoted a long-tenured staff member to the newly-created Director of Grants and Finance position, which separated and removed all finance duties from the Director of Administration. To support the Director of Grants and Finance, a full time Grants and Finance Specialist staff position was created in Q3 of 2022. The organization has scaled back reliance on the contracted accounting service and has ensured that all claims, with the implementation of personnel time tracking systems, are submitted through our Finance Department. We continue to use a contracted accounting service for higher-level accounting duties and for on-going advisement that supplements, instead of replaces, the work of internal staff. We are confident these changes have improved the agency?s ability to provide adequate management oversight in the financial reporting process. This was completed in Q2 of 2023.