Finding 7948 (2023-002)

Significant Deficiency
Requirement
P
Questioned Costs
-
Year
2023
Accepted
2024-01-09
Audit: 10357
Organization: Mighty Fortress Manor (MN)

AI Summary

  • Core Issue: There are gaps in cash management controls, leading to unprocessed fund transfers and incorrect check date entries.
  • Impacted Requirements: The Organization's ability to accurately record and report financial data is compromised, risking misstatements in financial statements.
  • Recommended Follow-Up: Ensure timely verification of reimbursement requests and maintain accurate payment records without post-issue changes in the general ledger.

Finding Text

Condition: During the audit process, we noted two instances where there was a lack of control over cash management. In one situation, the Organization properly requested a transfer of funds from the residual receipts account in February 2023, but the transfer did not take place, and the funds were not received. The other situation involved the dating and issuance of a check near year end. The check was written and dated on September 28, 2023 and was correctly included as an outstanding check on the September 30, 2023 bank reconciliation. This check date was later changed to October 1, 2023 in the Organization’s general ledger, which is after the Organization’s fiscal year end. Effect: A control deficiency exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions to prevent or detect misstatements on a timely basis. This could affect the Organization’s ability to initiate, record, process, and report financial data consistent with the assertions of management in the financial statements. Cause: The management agent was aware of the request for reimbursement from the residual receipts account, but did not follow up to ensure that the funds were actually released and deposited into the Organization’s operating account. The management agent is unsure why the check date was changed in the general ledger after the check was originally written and issued. Criteria: The Organization should have procedures in place to make sure there is adequate review of general ledger activity, and these procedures must be followed to ensure all funds are received and payments are recorded correctly. Recommendation: We recommend that the Organization verifies all requests for reimbursements are received in a timely manner. We also recommend that the Organization verifies that payments are recorded in the correct period and not changed in the general ledger after the checks are written. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and the auditor’s recommendations will be adopted.

Corrective Action Plan

Auditor Recommendation Recommendation: We recommend that the Organization verifies all requests for reimbursements are received in a timely manner. We also recommend that the Organization verifies that payments are recorded in the correct period and not changed in the general ledger after the checks are written. Corrective Action Plan (CAP) 1. Explanation of Disagreement with Audit Finding There is no disagreement with the audit finding. 2. Action Planned in Response to Finding Sara Wohlers and Josh Warner (management agent) will establish a review process that will include making sure all payments are recorded within the proper period. It will also include ensuring all HUD/HAP funds are received in full during that period and any short falls or overages are identified within the proper period. 3. Official Responsible for Ensuring CAP Sara Wohlers is the official responsible for ensuring corrective action of the deficiency. 4. Planned Completion Date for CAP This plan will be implemented for the September 30, 2024 audit. 5. Plan to Monitor Completion of CAP John Frank (board chair) and Sara Wohlers will be monitoring this plan.

Categories

Cash Management

Other Findings in this Audit

  • 7947 2023-001
    Material Weakness Repeat
  • 584389 2023-001
    Material Weakness Repeat
  • 584390 2023-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $617,311
14.195 Section 8 Housing Assistance Payments Program $156,024