Finding 567945 (2024-003)

Criteria: A properly designed internal control structure relies greatly on a proper segregation of duties between several individuals. The duties related to initiating, authorizing, recording, processing and reporting financial data would be segregated so there is less likelihood that a misstatement of the entity’s financial statements would occur. In addition, the controls over the significant areas should be documented in order to determine that the controls are functioning. Condition: Because of the complete turnover in staff, there has been certain significant internal controls that have not been documented or performed to ensure there is a proper segregation of duties in the internal control process. These items are summarized as follows: • Cash – during our audit of controls over significant processes we noted the bank reconciliations and review of the bank statements were not being completed internally by the Agency’s staff but was only being completed by the fee accountant. It is the responsibility of the Agency to review these documents to ensure unusual or unintended transactions are identified by the Agency • Monthly Deposits and Rent Registers – During our audit of this process we noted the deposit breakdowns and rental register controls are not being documented, we were not able to determine if the controls are functioning as of September 30, 2024. • Payroll Tax Reports – During our audit we noted the Authority had withheld federal payroll taxes on wages and made the appropriate deposits but was not able to provide us copies of the IRS Form 941 reports for the quarters ending December 31, 2023 and March 31, 2024. The Authority hired a vendor to completed these reports but did not maintain a hard-copy of the report and the vendor was unable to re-generate the form. It is imperative that the Agency maintain hard-copies of all payroll reports and not to rely on any vendor for this information. Cause: The Agency has not properly implemented and documented the internal controls as designed. Effect or Potential Effect: The lack of controls over the categories above could result in questioned costs and misstatements in the financial statements in the future. Recommendation: The Agency needs to review and re-evaluate its internal control procedures over the significant areas of its internal control structure and make sure the controls are well documented to ensure the controls are identifiable and traceable during the audit process. View of Responsible Official: Management agrees with the Finding.