Finding 498397 (2019-002)

Material Weakness
Requirement
Activities Allowed/Unallowed
Questioned Costs
-
Year
2019
Accepted
2024-09-26
Audit: 321137
Auditor: Wipfli LLP

AI Summary

  • Core Issue: There is a material weakness in internal controls over compliance with federal programs due to inadequate documentation.
  • Impacted Requirements: Management must maintain accurate records to support account balances, which was not met during the audit.
  • Recommended Follow-Up: Establish better systems for record storage and ensure management reviews financial statements regularly.

Finding Text

inding Number 2019-002: Represents a material weakness in internal control over compliance with Community and Family Services, Inc.'s major federal programs. Repeat Finding: No Questioned Costs: None Funding Agency: Department of Housing and Urban Development & Department of Health and Human Services Title: Section 8 and Head Start AL Numbers: 14.871 & 93.600 Award Year: Section 8: 01/01/19 - 12/31/19 Head Start: 11/1/2018 - 10/31/2019 Head Start: 11/1/2019 - 10/31/2020 Condition - Throughout the early stages of audit fieldwork management struggled to provide proper documentation to substantiate account balances. In order to substantiate balances, the audit team guided management in gathering and completing various schedules which ultimately was used as audit evidence. As a consequence the audit process lasted significantly longer than considered normal. Criteria - Management is responsible for establishing and maintaining a system of internal controls that includes keeping accurate records to support account balances. Effect or Potential Effects - As a result of improper documentation being stored and shared, the Organization has a material weakness in internal controls and compliance over financial reporting. Cause - The Organization has had turnover and has limited staff working in the accounting office. Auditor's Recommendation - We recommend that the Organization create systems to store required accurate records as part of their system of internal control. Management should continue to review and approve the annual financial statements and the related footnote disclosures. View of Responsible Official - The Organization agrees with the finding and will investigate if this can be addressed internally by management.

Corrective Action Plan

CFS is working to integrate all accounting processes into MIP fully and to submit all bills and receipts electronically. • All staff with purchasing authority and program budget oversite duties are trained on bill coding and must submit the Grant ID, Program ID, and GL code with every bill. In addition, they have access to automated cost-share calculators to ensure split costs are appropriately recorded. In addition, staff with these duties are evaluated on compliance, timeliness, and accuracy as part of the annual employee appraisal process. Staff with deficiencies related to expense reporting are subject to performance improvement plans and disciplinary action. • The agency also created a required lost receipt form that staff must submit by the close of the reporting period for any expense not accompanied by a receipt. • Electronic bills and receipts are sent to a shared email account to ensure coverage and timely processing if key staff are out or positions are vacated. • The Accounting clerk is responsible for reviewing bills, entering them into MIP, and processing payments. The Director of Finance and Administration manages the system and conducts spot audits to ensure all transactions are correctly logged and supported by paperwork. Person(s) Responsible: Brian Atkinson – Paper, Tom Steffen – Electronic merger. Timing for Implementation: Paper File Process Completed, Electronic Merge to be completed by 12/31/24 for fiscal years 2022, 2023 Section II, Finding Number 2019-001: Represents a material weakness in internal control over compliance with Community and Family Services, Inc.'s major federal programs Corrective Action Plan: Head Start: After discussion and in-depth review in the summer of 2022, CFS determined it did not have the proper management or financial structure to administer the Head Start program. With the Board's approval, CFS ceased operating Head Start after the 2022 school year and has determined that it will not pursue this program immediately. Section 8 Housing Choice Voucher Program: CFS moved this program to the Finance and Administration Department due to the heavy fiscal lift and oversight needs. This allows the Director of Finance to oversee and engage with program staff daily. In addition, the payment process has been automated and streamlined into MIP to ensure timely processing and payment documentation. CFS also continues to work with IHCDA as the program evolves at the state level to manage better payment adjustments, automated payment processes, rent increases, and other program changes that will have financial oversight implications. Person(s) Responsible: Tom Oliver, past Executive Director Elizabeth Darby, Executive Director– corrective action; Tom Steffen – ongoing management and oversite of Section 8

Categories

HUD Housing Programs Material Weakness Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 498394 2019-001
    Material Weakness
  • 498395 2019-001
    Material Weakness
  • 498396 2019-001
    Material Weakness
  • 498398 2019-002
    Material Weakness
  • 498399 2019-002
    Material Weakness
  • 498400 2019-003
    Material Weakness
  • 498401 2019-003
    Material Weakness
  • 498402 2019-003
    Material Weakness
  • 498403 2019-004
    Material Weakness
  • 498404 2019-004
    Material Weakness
  • 1074836 2019-001
    Material Weakness
  • 1074837 2019-001
    Material Weakness
  • 1074838 2019-001
    Material Weakness
  • 1074839 2019-002
    Material Weakness
  • 1074840 2019-002
    Material Weakness
  • 1074841 2019-002
    Material Weakness
  • 1074842 2019-003
    Material Weakness
  • 1074843 2019-003
    Material Weakness
  • 1074844 2019-003
    Material Weakness
  • 1074845 2019-004
    Material Weakness
  • 1074846 2019-004
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $1.34M
93.600 Head Start $526,921
93.569 Community Services Block Grant $325,593
81.042 Weatherization Assistance for Low-Income Persons $278,977
17.235 Senior Community Service Employment Program $205,385
10.557 Special Supplemental Nutrition Program for Women, Infants, and Children $137,605
14.231 Emergency Solutions Grant Program $29,852
10.558 Child and Adult Care Food Program $19,623
93.568 Low-Income Home Energy Assistance $14,895