Finding 497466 (2023-001)

Material Weakness in Internal Control over Financial Reporting – Inadequate Segregation of Duties Criteria: The segregation of duties and responsibilities between different individuals for custody of assets, recordkeeping for those assets, and reconciliation of those asset accounts is an important control activity needed to adequately protect the entity’s assets and ensure accurate financial reporting. Condition: The Project does not have adequate personnel to assign responsibilities in such a way that different employees handle different portions of a transaction. Context: Due to the limited number of personnel, duties and responsibilities related to custody of assets, recordkeeping for those assets, and reconciliation of those asset accounts cannot be properly segregated. Cause: The Project’s limited size and staffing resources have made it difficult for management to provide sufficient staffing to fully segregate incompatible duties in a cost-effective manner. Effect: An individual controlling a transaction from beginning to conclusion does not have oversight from other individuals to ensure that the transaction was properly executed and recorded. Recommendation: Due to the present size of the staff, it may not be feasible for the Project to correct this situation by the hiring of additional employees, due to cost benefit considerations. We would recommend that the board of Commissioners take an active role in internal controls and closely monitor all accounting functions, while seeking ways to continue to strengthen compensating controls. Auditee Response/Corrective Action Plan: See page 42. Material Weakness in Internal Control over Compliance – Inadequate Segregation of Duties Federal Program: CFDA 10.415 – Rural Rental Housing Loans Pass-Through Entity: U.S. Department of Agriculture – Rural Development Award Number: N/A Compliance Requirements: N/A Type of Finding: Material Weakness in Internal Control over Compliance Criteria: See Part II, Finding 2023-001 Condition and Context: See Part II, Finding 2023-001 Questioned Costs: N/A Cause: See Part II, Finding 2023-001 Effect or Potential Effect: See Part II, Finding 2023-001 Recommendation: See Part II, Finding 2023-001 Repeat Finding: 2022-001, 2021-001, 2020-001, 2019-001, 2018-001, 2017-001, 2016-001, 2015-001, 2014- 001, and 2013-001 Responsible Official’s Response and Corrective Action Plan: See Page 40, Finding 2023-001 Planned Implementation Date: See Page 42, Finding 2023-001 Person Responsible for Corrective Action: Manager