FRAYSER COMMUNITY DEVELOPMENT CORPORATION

Item No. 2020-001: Internal Control - Maintenance of General Ledger Condition: The general ledger was not properly maintained for the year thereby resulting in inaccurate recording of certain activity and failure to record other activity relating to mortgage receivables loan forgiveness, mortgage payables loan forgiveness, improper classification of funds received, revenue recognition (including cut-off errors and inappropriate recognition of contingent revenues), accrued liabilities, disposals of properties, fixed assets (including disposals, impairments & capitalization), release of restrictions for restricted net assets, and improper classification of payments. Criteria: Proper maintenance of the general ledger and all activity is imperative to ensure proper reporting of financial activities in order to manage the entity's operations and assist in the timely identification of errors and omissions. Cause: Due to the unexpected death of the Business Director, insufficient succession planning and a lack of time required to find a suitable replacement, procedures to ensure proper maintenance of the general ledger are either incomplete or inefficient. Possible Asserted Effect: General ledger balances were misstated until adjusted and corrected. Recommendation: (l) We recommend development of a sufficient succession plan and, (2) implementation of procedures to properly and timely reconcile and review supporting records to the general ledger including monitoring revenue and expense cut-off procedures to ensure revenues and expenses are properly recorded in the proper period, control of asset additions/disposals, monitor grant compliance requirements, and to properly release restriction as those restrictions are met. Management's Response: We concur with the finding.

Item No. 2020-002: Internal Control- Notation of Proper Approval Condition: Multiple supporting documents for payments of expense were not signed as approved for payment by authorized personnel. Criteria: All requests for payments of expense should have proper supporting documentation and be properly reviewed and approved by authorized personnel before payment. Cause: FCDC failed to follow sound accounting practice by showing approval for payment on supporting documents by those charged with the responsibility for approval. Effect: By not requiring proper authorization on all supporting documents before payment, unauthorized payments could be made for unauthorized/illegitimate expenses. Recommendation: All supporting documentation for payment should be reviewed and approved by authorized personnel and signed showing proper approval before payments. Auditee Response: We concur with this finding.

Item No. 2020-003: Internal Control- Supporting Documentation for Proper Allocation of Expenses Condition: Appropriate supporting documentation was not provided to prove administrative expenses were correctly charged to the proper grant, nor was documentation provided to prove that those administrative expenses were not duplicated by being charged to multiple grants. Criteria: Per guidance, costs are to be supported by appropriate documentation and correctly charged as to account, amount, and period. Appropriate documentation should include allocation to proper grant and show consistency with application along with support that the expense has not already been or will not be charged to another source of income. Cause: Due to the unexpected death of the Business Director and insufficient succession planning, proper tracking of expenses were either not followed or FCDC is unable to find such supporting workpapers. Effect: By not properly noting and tracking restrictions on payments of expenses, applying expenses to grants for reimbursement that were either unauthorized or unallowable expenses or duplicating request for reimbursement of one expense form more than one source may occur. Recommendation: It is recommended that FCDC uses the classification function in QuickBooks or some other method to verify that expenses are not duplicated and applied to more than one grant or source of revenue. Auditee Response: We concur with this finding.

Item No. 2020-004: Reporting Condition: The data collection form and related reporting package were not properly and timely submitted in accordance with Section 320 of OMB A-133 and Uniform Guidance 2 CFR 200.512(a). Criteria: The audit package and the data collection form shall be submitted 30 days after receipt of the auditor's report(s), or 9 months after the end of the fiscal year- whichever comes first. Cause: The unexpected death of the Business Director, staff turnover, insufficient succession planning, and retirement of the Former Executive Director contributed to this significant deficiency. Effect: Improper or untimely submission of the financial reporting package will result in the entity classified as a high-risk auditee in the subsequent period and could possibly lead to loss of future funding or repayment of current grant funds. Recommendation: The fiscal officer or a designee should be assigned responsibility for monitoring compliance with submission deadlines for the reporting package. Auditee Response: We concur with this finding.