Finding 39428 (2022-001)

Material Weakness Repeat Finding
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-09-28

AI Summary

  • Core Issue: The Council lacks adequate segregation of duties due to a small staff, increasing the risk of undetected fraud or errors.
  • Impacted Requirements: Internal controls are insufficient, as one individual can manage transactions from start to finish, leading to potential material misstatements.
  • Recommended Follow-Up: Implement compensating controls like enhanced supervision and monitoring by management and the Board to mitigate risks.

Finding Text

2022-001 ? Segregation of Duties Criteria- A good system of internal control contemplates an adequate separation of duties so that no one individual handles a transaction from its inception to its completion. Condition- In our judgment, the Council?s staff is not large enough to permit adequate segregation of duties as reported above. This lack of segregation of duties does not allow management to detect and correct a material misstatement if present. Due to the size of the Council?s staff it is anticipated that this will be an ongoing finding. Cause-The Council?s staff is not large enough to permit adequate separation of duties. Effect-There is a resulting danger that intentional fraud or unintentional errors could occur and not be detected. Context- Council staff have limited segregation of duties for all transactions of the entity. Repeat Finding- This finding was reported in the immediately prior audit as Finding 2021-001. Recommendation- In our judgment, management and those charged with governance need to understand the importance of this communication. However, due to the lack of resources available to management to correct this weakness, we recommend that management mitigate this weakness with possible compensating controls such as close supervision and monitoring by management and by the Board of Directors.

Corrective Action Plan

2022? 001 - Segregation of Duties Condition/Context: Council staff have limited segregation of duties for all transactions of the entity. The Council?s staff is not large enough to permit adequate segregation of duties. This lack of segregation of duties does not allow management to detect and correct a material misstatement if present. Due to the size of the Council?s staff it is anticipated that this will be an ongoing finding. Compensating controls are in place; however, this continues to be an ongoing finding. Recommendation: In our judgment, management and those charged with governance need to understand the importance of this communication. However, due to the lack of resources available to management to correct this weakness, we recommend that management mitigate this weakness with possible compensating controls such as close supervision and monitoring by management and by the Board of Directors. Corrective Action Planned: The Council of Community Services has a full-time bookkeeper with adequate experience, continues to have Board involvement, and actively seeks new Board members with financial experience. We also added a Board member who is a Certified Public Accountant that also sits on the Finance Committee of the Board. This additional oversight adds layers of supervision and monitoring which should allow any intentional fraud or unintentional errors to be prevented or detected and corrected in a timely manner. Compensating controls are in place; however, this continues to be an ongoing finding. Contact Mikel Scott ? Executive Director Anticipated Completion Date Due to the size of the staff, this is expected to be an ongoing finding, all compensating controls have been in place since 2015.

Categories

Internal Control / Segregation of Duties Subrecipient Monitoring

Other Findings in this Audit

  • 39429 2022-001
    Material Weakness Repeat
  • 39430 2022-001
    Material Weakness Repeat
  • 39431 2022-001
    Material Weakness Repeat
  • 615870 2022-001
    Material Weakness Repeat
  • 615871 2022-001
    Material Weakness Repeat
  • 615872 2022-001
    Material Weakness Repeat
  • 615873 2022-001
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
93.568 Low-Income Home Energy Assistance $1.15M
14.239 Home Investment Partnerships Program $628,070
81.042 Weatherization Assistance for Low-Income Persons $225,652
14.U01 Fha Project No. 109-11007 $224,256
10.569 Emergency Food Assistance Program (food Commodities) $168,608
14.231 Emergency Solutions Grant Program $165,875
04.023 Emergency Rental Assistance Program $147,794
93.569 Community Services Block Grant $134,435
14.195 Section 8 Housing Assistance Payments Program $102,032
14.267 Continuum of Care Program $100,468
93.558 Temporary Assistance for Needy Families $38,290
97.024 Emergency Food and Shelter National Board Program $33,617
93.590 Community-Based Child Abuse Prevention Grants $5,000