Finding 22516 (2022-002)

Significant Deficiency
Requirement
A
Questioned Costs
-
Year
2022
Accepted
2023-03-30

AI Summary

  • Core Issue: The Executive Director had too much control over accounting tasks, risking errors and misuse of funds.
  • Impacted Requirements: Proper segregation of duties is needed to prevent unauthorized access to financial resources.
  • Recommended Follow-Up: Implement policies to ensure duties are divided among staff for better oversight and monitoring.

Finding Text

U.S DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Finding 2022-002: Segregation of Duties Allowable Activities / Allowable Costs Housing Voucher Cluster #14.871 Significant Deficiency Financial Statement Finding 2022-001 applies to this federal program. Statement of Condition The Executive Director was responsible for most of the accounting functions including the procurement and authorization of expenditures. Criteria There should be proper segregation of duties so that no single individual has access to authorization, recording, custody, or reconciling of assets. This is to ensure that unintentional or intentional errors are detected in a timely fashion. Cause The Authority relied on the former Executive Director until departure without adequate oversight and review. Effect or Potential Effect Executive Director had access to expend resources for unallowable expenses. Recommendation We recommend the Authority adhere to policies involving the segregation of duties to allow for effective authorization and monitoring procedures. Management?s Response Management agrees with finding, see Corrective Action Plan for plan of action.

Corrective Action Plan

Windsor Locks Housing Authority 120 Southwest Ave Windsor Locks, CT 06096 Phone (860) 627-1455 Fax (860) 292-5994 Email: wlha@wlocks.com CORRECTIVE ACTION PLAN 2022-002 ? Segregation of Duties, CFDA #14.871 Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Noncompliance, Significant Deficiency Auditee?s Response and Planned Corrective Action The former Executive Director resigned February 2, 2022 after which an Interim Executive Director was hired along with an Independent Fee Accountant. Use of an appropriate procurement policy, outsourcing most accountant functions to keep them separate from the [Interim] Executive Director?s responsibilities and increased involvement/oversight by the board, including check signing and review of bills has improved segregation of duties and oversight. Collectively these efforts have improved controls to prevent and detect unallowable expenditures. Planned Implementation Date of Corrective Action: Immediately Person Responsible for Corrective Action: Windsor Locks Management Company and Board Members while working with the Fee Accountant and at first the Interim Executive Director followed by DeMarco Management Corporation after their hire on 2/1/23.

Categories

Allowable Costs / Cost Principles Internal Control / Segregation of Duties Procurement, Suspension & Debarment Subrecipient Monitoring Significant Deficiency

Other Findings in this Audit

  • 22517 2022-003
    Material Weakness
  • 598958 2022-002
    Significant Deficiency
  • 598959 2022-003
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $1.18M
14.850 Public and Indian Housing $317,703