Finding Text
Criteria:
Sound accounting policies suggest that the City is required to reconcile and compare information reported in its financial records to the underlying accounting records and reports provided to and from grantor and oversight agencies.
Conditon:
General ledgers for the City’s Community Development Block Grant (CDBG), Home Investment Partnership Grant (HOME), Housing Opportunities for Persons with AIDS (HOPWA) and Emergency Shelter Grant (ESG) funds do not always close certain current activity accounts to grant reserves for proper carryforward. In addition, certain general ledger receivable and other accounts remain from prior years that should be investigated for proper disposition.
Effect:
Accounts in the CDBG Trust Fund may require adjustments and possibly funding to reconcile and adjust for prior year remnant discrepancy.
Cause:
The remaining discrepancies were carried forward from prior years when the City did not reconcile the City’s financial records to the IDIS system.
Context:
The City has incorporated a process of reconciling current year IDIS System drawdowns and activity to its general ledger. Certain legacy receivable and other account balances remain in the City’s general ledger, carrying forward from prior year activity when the City did not properly reconcile general ledgers to IDIS System activity (previously reported as material weaknesses in significant deficiencies).
Whereas this finding has been repeated annually from 2011 to 2020 as a material weakness and 2021 as a significant deficiency, it has been downgraded to a matter of compliance and other. Additional reconciliation is required to correct the remaining discrepancies carried forward from prior years.
Recommendation:
The City should continue with reconciling IDIS System drawdowns and activity to its general and subsidiary ledgers. The City should investigate discrepancies carried forward from prior years for proper disposition.
Views of Responsible Officials of the City (unaudited):
The Chief Financial Officer will continue to oversee this project to close out the old accounts in a timely manner and make sure all systems are reconciled. Internal controls have been set into place to ensure future compliance. The Comptroller will train and continue to work closely with personnel in charge of reporting and processing IDIS and vouchers drawdowns. The Division of Accounts & Control will continue to maintain a sub-ledger to ensure IDIS and the City’s financial system tie out prior to the processing of any payments, and each payment request will require an IDIS activity reference number in order to be processed. Monthly reconciliation of funds has been implemented and copies are sent to US HUD on a monthly basis. In addition, the City has hired a 3rd party grant consultant to help navigate and strengthen our overall processes.