Finding Text
2020-001 Segregation of Duties – Loan Program
Significant Deficiency
This is a repeat finding. The prior-year’s auditing finding number is 2019-001.
Condition: The Housing Authority administers a loan program, referred to internally as the
HCRI loan program. The loans are administered and accounted for by finance and management
level personnel that also participate in the program, without any additional oversight. Large loan
balances are outstanding from finance and management level personnel individuals.
Criteria: Management is responsible for administering a loan program, referred to internally as
the HCRI loan program. The loans are administered and accounted for by finance and
management level personnel. Individuals who benefit from the loan program should not have
complete discretion over the approval of loan requests, or the recording of balances and
repayments.
Cause: Many of the loans go back years and the Housing Authority does not wish to write loan
balances off in case tribal members request new loans.
Effect: The loan program was not carried out pursuant to sound policies. Providing large
balances to a few individuals increases the possibility that the Housing Authority may not
receive full payment for amounts advanced.
Recommendation: The Housing Authority’s fiscal policies should be revised to ensure that
preventive controls are in place over check disbursements for loan disbursements, such that
checks must be signed with live signatures at least the signature of one Tribal Council member.
Further, individuals who benefit from the loan program should not have complete discretion over
recording and processing of advances and repayment. We recommend a complete list of
outstanding balances be presented to the Tribal Council, or its designee, for continued
monitoring.