FAC Explorer

Finding 574902 (2025-001)

Significant Deficiency
Requirement
ABCEN
Questioned Costs
-
Year
2025
Accepted
2025-08-28
Audit: 365164
Organization: Dima Iv, Inc. (DE)
Auditor: Lank Johnson & Tull CPAS

AI Summary

  • Core Issue: A single individual is managing key financial functions without adequate oversight, risking errors and compliance failures.
  • Impacted Requirements: This situation violates the need for a strong internal control system as outlined in the Uniform Guidance.
  • Recommended Follow-Up: Reassign routine accounting tasks and reinstate regular management reviews to enhance oversight and compliance.

Finding Text

Finding 2025-001: Criteria: Accurate financial reporting and compliance with the Uniform Guidance require a strong internal control system, including proper segregation of duties and consistent management oversight. Condition: The Senior Director of Housing & Facilities is responsible for the custody of assets and for authorizing and recording transactions, with no regular oversight occurring. While an independent contractor assists with annual closing, there is no documented review process during the rest of the year. Effect: Reliance on a single individual for critical functions, without systematic reviews, undermines the reliability of financial reporting. Errors and irregularities may go undetected, thereby increasing the risk of material misstatement and noncompliance with federal requirements. Cause: Staffing constraints and an informal approach to internal controls have resulted in one individual performing incompatible functions. Management oversight once documented by weekly meetings between the Senior Director of Housing & Facilities and the CEO are no longer occurring. Recommendations: Management should strongly consider reallocating routine accounting tasks, such as preparing deposits and reconciling bank statements, to different staff members. It is also advisable to reinstate documented, periodic management reviews of both financial and compliance-related data. These regularly scheduled reviews will help detect errors, strengthen accountability, and support adherence to the requirements of the Uniform Guidance. Management Comments: We concur with this finding and recognize the need for a more robust control environment. We plan to reevaluate staff responsibilities, expand the documentation of oversight procedures, and implement structured, recurring reviews of financial transactions and compliance-related data to ensure compliance with Uniform Guidance requirements.

Corrective Action Plan

A. Current Findings on the Schedule of Findings, Questioned Costs, and Recommendations 1. Finding 2025-001 a. Comments on the Finding and Each Recommendation: We concur with the finding that DIMA IV, Inc. requires segregation of duties. We recognize that the current structure does not adequately separate key financial responsibilities, which could lead to potential risks. Segregation of duties is essential to maintaining the integrity of our operations and ensuring that no single individual has unchecked control over critical financial or compliance-related processes. b. Action(s) Taken or Planned on the Finding: 1. Implemented Monthly Oversight Meetings: Beginning in January 2025, we instituted monthly meetings to review financial statements, budgets, forecasts, and compliance-related data. These meetings include key stakeholders and team members to ensure timely discussions of financial status, variances, and compliance matters. This structure enhances accountability and provides regular managerial oversight. 2. Hired Key Finance Staff to Support Segregation of Duties: To improve internal controls, we have hired a new Chief Finance Officer with expanded responsibilities over the accounting functions of the housing entities. We have also hired a Senior Accountant who has assumed responsibility for the day-to-day accounting tasks previously performed by the Senior Director of Housing & Facilities. These hires have significantly enhanced our ability to segregate duties. We are currently in the process of formalizing these new roles, along with related internal controls and procedures, to establish a more robust control environment.

Categories

Internal Control / Segregation of Duties

Other Findings in this Audit

  • 1151344 2025-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.181 Supportive Housing for Persons with Disabilities $1.15M
14.195 Project-Based Rental Assistance (pbra) $44,695