Finding Text
FINDING: Audit Adjustments and Segregation of Duties Federal Programs Affected: Housing Trust Fund, ALN #14.275 and Section 8 Subsidy ALN #14.181 Compliance Requirements: Allowable Cost Questioned Costs: None known and likely exceeding $25,000. Condition and Cause: During our engagement, we proposed audit adjustments due to a lack of timely account reconciliations and a lack of review of such reconciliations. Adequate segregation of duties would include timely review of all accounts. The lack of review throughout the year, mainly in the first three quarters of the year, was due to significant turnover in key management positions and a lack of training in the new software implemented in fiscal year 2020. Seven adjustments were made during the engagement. Our engagement identified some invoices without authorized purchase orders or invoices due to software changes. We also noted lease agreements tested that did not match HAP requests. Criteria and Effect: These adjustments were not recorded through the Organization?s existing internal controls, and therefore, resulted in misstatement of the Organization?s financial statements. Supporting documentation did not provide an audit trail. The findings above create an opportunity for incorrect or incomplete financial reporting or fraud. Segregation of duties requires separating the custody of assets, recording of transactions, and review processes in order to promote accuracy and integrity of information. Repeat Finding from Prior Year: Yes, revision of prior year finding #2021-002. Recommendation: It is the responsibility of management and those charged with governance to ensure all year end adjusting entries are made and balance sheet accounts are accurate at year end. Management should continue to reconcile all accounts on a monthly basis and ensure proper review of transactions is occurring. Response/Correction Action Plan: Management is in agreement with the finding. See Correction Action Plan.