LUTHERAN HOUSING DEVELOPMENT FUND CORP OF LONG ISLAND

Internal Control over Timely Review of Bank ReconciliationsDuring our audit, we noted that bank reconciliations lacked evidence of timely review. Although bankreconciliations had evidence of review, the time between the date of receipt of the bank statements andthe subsequent reconciliation and review was not completed timely (within one month).

As a result of the significant turnover in the CFO and Director of Finance position in prior years, theOrganization has struggled to complete bank reconciliations and related reviews on a timely basis.Management is aware of this issue and new personnel has been hired. Management has caught up onreviews and implemented sufficient policies to ensure timely review.

Internal Control over Review of Journal EntriesReview or approval of journal entries prepared by the accounting department prior to posting to thegeneral ledger should be performed and documented on a routine basis. While management reviews thebalance sheet and income statement regularly, this does not sufficiently mitigate the risk that inaccurateentries may be posted, resulting in errors in financial reporting.

As a result of the significant turnover in the CFO and Director of Finance position in prior years, theOrganization has struggled to follow financial policies with regards to journal entries and proper review.Management has hired new personnel and agreed to implement a policy to have the CEO review journalentries made by the Director of Finance over $25,000, on a monthly basis, to ensure proper oversight ofentries being posted to the general ledger.

Internal Control over Review of Monthly Financial StatementsReview or approval of monthly financial statements prepared by the Director of Finance should beperformed and documented on a routine basis. While management reviews the balance sheet and incomestatement regularly, the lack of formal documentation of such review leaves the Organization exposed tothe risk of insufficient review of financial reporting, which could result in errors in financial reporting.

Management noted that monthly financial statements are prepared by the Director of Finance andreviewed by the CEO and VP of HUD Housing, however there is no formal documentation of such review.The Organization is currently working on the implementation of Microsoft Cloud to allow the ability for editsand signoffs of monthly financial statements, along with other documentation, on a real time basis, whichwill add formal documentation of sufficient review of monthly financial statements.