Finding Text
2022-003. Account Analysis Criteria: HUD has certain accounting requirements for gathering, processing and reporting all financial transactions per HUD Financial Management Handbook No. 7475.1 Chapter 6. Condition: The level of effort devoted towards account analysis of balance sheet and income and expense items was insufficient. Several accounts were noted to be incorrect and / or unsupported with sufficient detail as follows: ? No supporting documentation or calculation maintained for the following account balances: - Prepaids - Payroll tax withholding - A/R - Fraud recovery - Allowance for doubtful account ? Fraud recovery - A/R ? HUD (EHV) - Other current liabilities ? No depreciation schedule prepared for FY 2022. ? Certain accounts did not reconcile to the schedule as follows: - Cash - FSS liability - Operating grant revenue for HCV HAP, FSS and ROSS. ? Few accounts were rolled forward from prior year without any adjustments made in the current year as follows: - Accrued compensated absences liability - A/R ? HUD (FSS) Questioned Costs: None noted. Effect: The PHA has not maintained ledgers with sufficient accuracy and proper supporting documentation and approval. Cause: It appears that PHA has not adhered to proper internal control and accounting procedures. Recommendation: I recommend that the PHA formulate a plan of action whereby all financial information can be gathered, processed and presented in an accurate manner backed by proper supporting documentation. Management?s Response: We agree with the Auditor?s finding and the following actions will be taken to improve the situation. Weekly, Monthly, and Yearly checklists will be created along with a specific criterion of required documentation to be kept with each account reconciliation. In the event of an account adjustment documentation will be kept to cross reference all adjustments back to the journal entry.