Neighborhood Development Alliance, Inc.Non-Profit

FINDING 2024-001: Lack of Segregation of Duties - Criteria – A good system of internal controls contemplates an adequate segregation of duties so that no one individual handles a transaction from its inception to completion. Condition – The small size of NeDA’s staff limits the extent of optimal segregation of duties. Cause – The size of NeDA’s staff and budget constraints precludes certain internal controls that would be preferred if it were large enough to provide optimum segregation of duties. Effect – A material misstatement of the consolidated financial statements occurred and was not detected. Repeat Finding – No. Recommendation – Management, the contract accountant, and the Board of NeDA should remain involved on the financial affairs of NeDA on a regular basis to provide oversight and independent review functions and mitigate the weakness created by the lack of segregation. Auditee's comments and response – Management, the Board, and its contracted accounting staff will regularly monitor financial reports and activities of NeDA. Responsible party for the corrective action – Maria Steffel, Executive Director

FINDING 2024-002: Controls Over Accounting of Real Estate Subsidiaries - Criteria – Organizations should have controls in place to ensure accounting activity is recorded timely and accurate. Condition – For the audit of NeDA’s real estate subsidiaries, the property management agent was not able to provide an accurate tenants receivable aging report that agreed to the accounting records, escrows held with the mortgager where not properly recorded or reconciled, and other balance sheet accounts were inaccurate and not reconciled. Cause – There was a breakdown in controls over the accounting of NeDA’s real estate subsidiaries. Effect – The accounting records of the real estate subsidiaries were inaccurate. Repeat Finding – No. Recommendation – We recommend that the property management agent enhance its internal controls, policies and procedures to ensure that all accounting activity is accurately and timely recorded. Auditee's comments and response – Management agrees with the finding. Effective October 1, 2024, NeDA moved the management of its real estate subsidiaries to a new property management agent. Responsible party for the corrective action – Maria Steffel, Executive Director