FAC Explorer

Finding 390120 (2023-002)

Significant Deficiency Repeat Finding
Requirement
B
Questioned Costs
-
Year
2023
Accepted
2024-03-29
Audit: 301005
Organization: Integrated Living, Inc. (KS)
Auditor: Ssc CPAS P A

AI Summary

  • Core Issue: Inadequate internal controls over project expenditure approvals led to unapproved spending.
  • Impacted Requirements: Failure to comply with effective internal control standards increases risks of misstatements and fraud.
  • Recommended Follow-Up: Ensure all project expenditures receive proper approval and maintain documentation of that approval.

Finding Text

2023-002 Review and Approval of Project Expenditures (Significant Deficiency) Federal Agency: Department of Housing and Urban Development Program Name: Section 811 Supportive Housing for Person with Disabilities Assistance Listing Number: 14.181 HUD Project Number: 102-HD018 Award period: Year ended June 30, 2023 Criteria: An effective internal control system exists if controls are effective in preventing or detecting material misstatements and potential fraudulent activities in the cash disbursement process. It provides reasonable assurance for the safeguarding of assets, the reliability of financial information and compliance with laws and regulations, including the Uniform Guidance. Condition: We have determined that there was an inadequate design of internal control over the approval of project expenditures during the fiscal year ended June 30, 2023. We noted that, out of forty tested expenditures totaling $35,056, three expenditures totaling $840 did not show that evidence of approval of that expenditure was obtained. Cause: The Organization’s policies and procedures were not designed to ensure that all project expenditures obtain proper approval and that evidence of that approval is maintained. Effect: The Organization's lack of proper internal controls over approval of project expenditures increases the risk of material misstatements and potential fraudulent activities. Recommendation: We recommend that the Organization obtain proper approval of all project expenditures and that evidence of that approval is documented and maintained. Repeat Finding: Yes. Prior year reference number 2022-002. Views of Responsible Officials and Planned Corrective Actions: Management acknowledges there is a control weakness as discussed above and will work to implement additional controls and reviews as recommended.

Corrective Action Plan

March 26, 2024 HUD Service Audit Director Kansas City, Kansas Integrated Living, Inc. respectfully submits the following corrective action plan for the year ended June 30, 2023. SSC CPAs, P.A. 58525 SW 29th St, Suite 100 Topeka, Kansas 66614 Audit period: Year ended June 30, 2023 The findings from the June 30, 2023 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. Section I of the schedule, Summary of Audit Results, does not include findings and is not addressed. FINDINGS-FINANCIAL STATEMENT AUDIT 2023‐001 Internal Controls over Financial Statement Presentation (Material Weakness) Recommendation: The Board of Directors and management should review the impact of the current year adjustments on the financial reporting process. Once this review is complete, the Organization should then perform a risk assessment to determine the best way to implement appropriate internal controls over financial reporting to ensure conformity with U.S. GAAP. Action Taken (Unaudited): Management is in the process of updating its control procedures to include proper written policies for the internal control over financial reporting to ensure conformity with U.S. GAAP. John Griffin, CFO of COF Training Services, Inc. (Management Agent of Integrated Living, Inc.) is responsible for this corrective action. Anticipated completion date is June 30, 2024. FINDINGS-FEDERAL AWARD PROGRAMS AUDITS 2023‐002 Review and Approval of Project Expenditures (Significant Deficiency) Department of Housing and Urban Development Section 811 Supportive Housing for Person with Disabilities, Assistance Listing Number 14.181 Recommendation: The Organization should obtain proper approval of all project expenditures and that evidence of that approval is documented and maintained.. Action Taken (Unaudited): Management is in the process of updating its control procedures to ensure proper approval of all project expenditures. John Griffin, CFO of COF Training Services, Inc. (Management Agent of Integrated Living, Inc.) is responsible for this corrective action. Anticipated completion date is June 30, 2024. 2023‐003 Written Procedures of Internal Control over Compliance (Significant Deficiency) Department of Housing and Urban Development Section 811 Supportive Housing for Person with Disabilities, Assistance Listing Number 14.181 Recommendation: The Organization should develop written policies for the internal control over compliance of federal awards. Action Taken (Unaudited): Management is in the process of updating its control procedures to include proper written policies for the internal control over compliance of federal awards John Griffin, CFO of COF Training Services, Inc. (Management Agent of Integrated Living, Inc.) is responsible for this corrective action. Anticipated completion date is June 30, 2024. If HUD has questions regarding this plan, please call Patrick Gardner at 785-242-5035. Sincerely yours, Patrick Gardner CEO, COF Training Services, Inc. (Management Agent of Integrated Living, Inc.)

Categories

HUD Housing Programs Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 390121 2023-003
    Significant Deficiency Repeat
  • 966562 2023-002
    Significant Deficiency Repeat
  • 966563 2023-003
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
14.181 Supportive Housing for Persons with Disabilities $849,700
14.195 Section 8 Housing Assistance Payments Program $19,994