Finding Text
Finding 2023-001 - U.S. Department of Health and Human Services, Community Services Block Grant, Assistance Listing #93.569; U.S. Department of Housing and Urban Development, Housing Voucher Cluster, Assistance Listing #14.871/14.879
Statement of Condition: Internal control processes over financial accounting did not ensure that all transactions were properly recorded. Internal control processes over financial accounting did not ensure that key accounts were reconciled or reviewed on a periodic basis.
Criteria: 2 CFR Part 200 Section 200.302 Financial Management states that the financial management system of each non-federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award in accordance with the reporting requirements. Additionally, 2 CFR Part 200 Section 200.303(a), Internal Controls, requires that non-federal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the award in compliance with federal statutes, regulations and the terms and conditions.
Cause of Condition: Management oversight and lack of Finance Officer in place during period under audit.
Effect of Condition: Noncompliance with HUD and Uniform Guidance requirements and the possibility of undetected material misstatements and/or undetected misappropriation of assets.
Context: An understanding of processes and internal controls was performed with the Organization's management and tests were performed to determine if the processes and internal controls were implemented and effective. As part of this process we noted the following processes and internal controls were not effective and/or implemented. 1) Bank accounts were not reconciled during the year ending June 30, 2023. 2) Significant accounts were not reconciled. 3) Financial statements and/or reconciled financial information was not reviewed by management or the board of directors. While applying audit procedures, significant adjustments were identified as necessary to properly reflect the financial data in accordance with generally accepted accounting principles.
Recommendation: We recommend management review/enhance its accounting and internal control procedures to ensure that all key accounts are reconciled and reviewed with supporting evidence of such review. Furthermore, we recommend that the Organization consider additional financial and accounting training.
Questioned Costs: N/A
Reporting Views of Responsible Officials: Management agrees with the finding and will review the accounting and financial procedures, system of internal controls and policies.