Finding 33635 (2022-001)

Material Weakness
Requirement
B
Questioned Costs
$1
Year
2022
Accepted
2023-04-27
Audit: 31240
Organization: Octavia Court, Inc. (CA)

AI Summary

  • Core Issue: Fraudulent personal charges of approximately $6,800 were made on the organization's credit card by a site manager.
  • Impacted Requirements: The organization failed to maintain effective procedures for fraud detection and credit card reconciliation.
  • Recommended Follow-Up: Implement a low credit card limit or restrict credit cards to managers and directors; establish weekly reconciliations for new employees and monthly for existing employees.

Finding Text

Finding 2022-01 Finding Resolution Status: In progress. Information on Universe Population Size: Sampling was not used in the testing. Sample Size Information: No sampling approach was used. Identification of Repeat Finding: Not a repeat finding. Condition: At the commencement of the audit, the Organization notified the firm that there was suspected fraud by a site manager in which personal charges were made on the Organization?s credit card. Criteria: The Organization is required to establish and maintain effective procedures and systems to provide reasonable assurance to deter, mitigate, and identify fraud in a timely fashion. Effect: There was approximately $6,800 of known personal charges through December 31, 2022 which were not recovered by the employee. Context: During November and December 2022, the site manager spent approximately $6,800 on personal items using a company issued credit card. Cause: Credit card reconciliations were not submitted or reviewed during November and December 2022. Questioned Costs: Approximately $6,800. Recommendation: We strongly recommend that a low credit card limit be placed on credit cards or that only managers and directors have credit cards. Management Views and Corrective Action Plan: Management agrees with the finding and Recommendation. Management will implement a system wherein weekly credit card reconciliations will be required for all employees within their first 90 days of employment. Existing employees will be required to submit credit card reconciliations monthly. Failure to comply with the weekly or monthly submission requirements will result in the employee?s credit card being revoked.

Corrective Action Plan

Name of contact person: Serena Fields Corrective Action: Management will implement a system wherein weekly credit card reconciliations will be required for all employees within their first 90 days of employment. Existing employees will be required to submit credit card reconciliations monthly. Failure to comply with the weekly or monthly submission requirements will result in the employee?s credit card being revoked. Proposed Completion Date: July 31, 2023

Categories

Questioned Costs

Other Findings in this Audit

  • 33636 2022-002
    Material Weakness
  • 610077 2022-001
    Material Weakness
  • 610078 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.181 Supportive Housing for Persons with Disabilities $2.71M