Finding 5708 (2022-001)

Finding 2022-1 – Interfund Receivables and Payables Financial Statement Audit Significant Deficiency The Authority must review the balances of the interfund receivables and payables on an annual basis to determine if repayment can be expected. Governmental accounting standards stipulate that if repayment is not expected within a reasonable time period, the interfund balances should be reduced and the amount that is not expected to be repaid should be reported as a transfer from the fund that made the loan to the fund that received the loan. Cause During the prior years, the Authority does not have procedures in place to prevent cash deficits from occurring in multiple funds, which resulted in interfund receivables and payables and accumulated deficits. Condition When a particular fund has a cash deficit and borrows funds from another fund, an interfund payable results in the fund that borrowed the funds and an interfund receivable results in the fund that paid out the funds. Over time, these interfund receivables and payables can grow as a result of the fund deficits. Effect of Condition Significant interfund balances have accumulated over the years from having large cash deficits in certain funds. Recommendation The Authority should address the repayment of the interfund receivables and payables. The balances of the receivables and payables should be review by management on an annual basis to determine if repayment is expected in a reasonable time period. If repayment is not expected, the interfund balances should be reduced and the amount that is not expected to be repaid should be reported as a transfer from the fund that made the loan to the fund that received the loan. Question Costs $0 Response There is no disagreement with the audit finding. Finding 2022-1 – Interfund Receivables and Payables Financial Statement Audit Significant Deficiency The Authority must review the balances of the interfund receivables and payables on an annual basis to determine if repayment can be expected. Governmental accounting standards stipulate that if repayment is not expected within a reasonable time period, the interfund balances should be reduced and the amount that is not expected to be repaid should be reported as a transfer from the fund that made the loan to the fund that received the loan. Cause During the prior years, the Authority does not have procedures in place to prevent cash deficits from occurring in multiple funds, which resulted in interfund receivables and payables and accumulated deficits. Condition When a particular fund has a cash deficit and borrows funds from another fund, an interfund payable results in the fund that borrowed the funds and an interfund receivable results in the fund that paid out the funds. Over time, these interfund receivables and payables can grow as a result of the fund deficits. Effect of Condition Significant interfund balances have accumulated over the years from having large cash deficits in certain funds. Recommendation The Authority should address the repayment of the interfund receivables and payables. The balances of the receivables and payables should be review by management on an annual basis to determine if repayment is expected in a reasonable time period. If repayment is not expected, the interfund balances should be reduced and the amount that is not expected to be repaid should be reported as a transfer from the fund that made the loan to the fund that received the loan. Question Costs $0 Response There is no disagreement with the audit finding. Finding 2022-1 – Interfund Receivables and Payables Financial Statement Audit Significant Deficiency The Authority must review the balances of the interfund receivables and payables on an annual basis to determine if repayment can be expected. Governmental accounting standards stipulate that if repayment is not expected within a reasonable time period, the interfund balances should be reduced and the amount that is not expected to be repaid should be reported as a transfer from the fund that made the loan to the fund that received the loan. Cause During the prior years, the Authority does not have procedures in place to prevent cash deficits from occurring in multiple funds, which resulted in interfund receivables and payables and accumulated deficits. Condition When a particular fund has a cash deficit and borrows funds from another fund, an interfund payable results in the fund that borrowed the funds and an interfund receivable results in the fund that paid out the funds. Over time, these interfund receivables and payables can grow as a result of the fund deficits. Effect of Condition Significant interfund balances have accumulated over the years from having large cash deficits in certain funds. Recommendation The Authority should address the repayment of the interfund receivables and payables. The balances of the receivables and payables should be review by management on an annual basis to determine if repayment is expected in a reasonable time period. If repayment is not expected, the interfund balances should be reduced and the amount that is not expected to be repaid should be reported as a transfer from the fund that made the loan to the fund that received the loan. Question Costs $0 Response There is no disagreement with the audit finding.