FAC Explorer

Finding 393712 (2021-001)

Material Weakness
Requirement
P
Questioned Costs
-
Year
2021
Accepted
2024-04-18
Audit: 303856
Organization: Community Development Partnership (MA)
Auditor: Sanders Walsh & Eaton CPAS LLC

AI Summary

  • Core Issue: The accounting system fails to separate records for the housing project, leading to potential fund commingling.
  • Impacted Requirements: This violates 7 CFR 3560.302, which mandates proper accounting and financial management for housing projects.
  • Recommended Follow-Up: Implement a new accounting system to ensure separate tracking and reporting for each project.

Finding Text

Separate accounting records for housing project operations - (Material Weakness) Criteria: According to 7 CFR 3560.302, borrowers must establish accounting and financial management procedures necessary to conduct housing project operations in a financially safe and sound manner. Borrowers must maintain records in a manner suitable for an audit, and must be able to report accurate operational results to the Rural Development (RD) from these accounts and records. Condition: The CDP accounting software is not set up to separate transactions for its RD project (Fred Bell Way) and to produce a separate statement of financial position and a general ledger. Cause: The CDP changed its accounting software and merge various accounts during the transition which made it difficult to separate projects' activities and financial records. Effect: Lack of accounting system that segregates and tracks funds for projects allows for comingling of funds from different projects Questioned Cost: None noted Recommendation: Establish an accounting system that provides for separate accountability for projects by segregating and tracking projects funds separately and producing separate financial records for each project. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost

Corrective Action Plan

The Net Suite accounting software is set up to separate transactions for its Rural Development (RD) project (Fred Bell Way) and to produce a separate statement of financial position and a general ledger. However, at the point of conversion to the Net Suite software in March 2021 and for several months thereafter this functionality was not being utilized correctly. and as such, there are historical transactions which must be corrected to separate all of the transactions for the RD project (Fred Bell Way). We are working with Net Suite consultants to assist us in getting these corrections processed.Anticipated Completion Date April 15, 2024.Responsible Contact Person-Kathleen Boyce, CFAO.

Categories

Material Weakness

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
14.239 Home Investment Partnerships Program $2.26M
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $561,862
14.228 Covid-19 - Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $458,135
14.871 Section 8 Housing Choice Vouchers $204,771
10.427 Rural Rental Assistance Payments $100,270
10.769 Rural Business Enterprise Grants $60,000
10.415 Rural Rental Housing Loans $44,968