Finding 574631 (2022-002)

Finding 2022-2 Control Activities, Information and Communication, Monitoring Condition: Repeat finding from prior year 2021-2. The organization has established internal control policies and procedures related to timely reconciliation of all integral accounts including but not limited to cash, accounts receivable/revenue and accounts payable/expenses. During the audit period 2021 and subsequent, these timely reconciliations were not being followed. Within the organization during 2021, there were some significant changes to management which included change in executive director, and subsequent to that change, the departure of the chief financial officer. During the initial stages of the audit examination for the fiscal year ending December 31, 2022, it was identified that financial information for certain integral accounts were not reconciled. During the audit period, a significant number of funding required reports, requests for reimbursement and related disbursements were not performed timely. With the delay in performance of these integral processes, the related financial information was not reflected in the initial accounting records submitted for audit. Criteria: Internal controls are developed and implemented to safeguard an organization and further its objectives. Internal controls function to minimize risks and protect assets, ensure accuracy of financial records, promote operational efficiency, and encourage adherence to policies, rules, regulations, and laws. Effect of Condition: Without the operation of proper internal control procedures related to accuracy of financial records and not having timely reconciled integral accounts, the agency had increased risks of not fully utilizing funding available, the agency runs the risk of not properly reporting financial information to outside funding sources, internal management and board of directors and increases risks for the potential of fraud. Cause of Condition: During the fiscal year 2021 and subsequent, the organization had undergone significant changes in personnel including but not limited to executive director(s), financial administrators, and financial staff. The organization’s internal control systems had a lapse of operational implementation. Recommendation: We recommend that the internal control procedures of the organization be reviewed on a revolving schedule for both effectiveness of design of the controls and operational implementation of controls. View of Responsible Officials and Planned Corrective Actions: Toledo Lucas County Homelessness Board agrees with the finding. The recommended corrections have been developed and implemented as of the date of the audit conclusion.