Finding Text
Criteria
Management's internal control processes should include timely clearing out of reconciliating
items on the reconciliation of the project's operating cash account. These reconciliations should
be reviewed by a supervisory person who understands both the general ledger and project
operations and can assist in researching and clearing out reconciling items.
Condition
There were material old items carried on the bank reconciliation that were not properly
recorded, resulting in adjustments that ultimately lead to a bank overdraft at June 30, 2024.
Cause
Management carried reconciling items on the bank reconciliation longer than their policy.
Effect or Potential Effect
The cash balance reported on the project's books is not an accurate account of the actual cash
balance which resulted in a bank overdraft. Additionally, there is a potential for fraudulent
activity to not be timely identified and rectified due to the lack of enforcement of controls.
Questioned Costs
N/A
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
Management should ensure there is enough oversight by qualified accounting personnel who
have the ability to research and resolve reconciling items. Additionally, management should
create a review process where they can enforce their existing policies.
Auditor Noncompliance Code:
S. Internal control deficiencies
Views of Responsible Officials
Management agrees with the finding and has implemented a new policy that financials are not
to be delivered to ownership until the property has completed all outstanding items.
Finding Resolution Status: Resolved