Finding Text
Finding No. 2024-003: Cash Disbursements and Classifications (Material Weakness)
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Title: Supportive Housing for Persons with Disabilities (Section 811)
Federal Assistance Listing Number: 14.181
Compliance Requirement: Allowable costs, Activities allowed or unallowed
Statement of condition
During the year ended June 30, 2024, the Organization:
did not properly classify certain expenditures between expense accounts;
did not properly record prepaid expenses; and
did not accurately record gross potential rent, vacancy, due to and from affiliates, and receivables.
Criteria
Management should review expenditures for accurate expense account classification and proper recording as expense or prepaid, and review revenue classifications to the appropriate revenue account recording to ensure proper financial and HUD reporting.
Cause
Review procedures were not sufficient to ensure expenditures were recorded in accurate expense accounts and properly recorded as prepaid, and that revenue was recorded in the appropriate revenue account and in the appropriate amounts.
Effect
Inaccurate expenses, improperly recorded prepaid expenses, and revenue over or understatement could result in improper financial and HUD reporting.
Recommendation
Management should implement an additional period-end review to ensure proper classification, proper recording of prepaid expenses, and accurate recording of revenue, due to and from affiliates, and receivables.
Identification of repeat finding
The finding is a repeat of Finding No. 2023-003.
Auditor non-compliance code
S - Internal control deficiencies
Questioned costs
None
Finding resolution status
In process