BENTON FRANKLIN COMMUNITY ACTION COMMITTEE

Department of Housing and Urban Development Department of Health and Human Services Material Weaknesses Condition: Multiple reallocations of salaries and related expenditures were not supported by underlying approved timesheets used to document the allocation basis for the allocation of salaries and related expenditures. Criteria: The reallocations were made via journal entries in which no additional supporting documentation was present to justify the reallocation of expenditures. Cause: Journal entries were used to reallocate salaries and related expenses without justification documentation and journal entries recorded were not reviewed or approved by someone other than the person authorized to record the journal entry. Effect: Because of the failure to follow BFCAC?s policy of allocating salaries and related expenditures based on time charged and documented, expenditures were reallocated with no justification or documentation to support the reallocation. Recommendation: BFCAC needs to consistently follow its allocation methodology regarding salaries and related expenditures which allocates these expenditures based on supporting approved timesheets for hours worked. If any adjustments are deemed necessary, approved documentation should be present to support the changes and the journal entries should be reviewed and approved by the approving program manager or executive director. Questioned Costs: Undeterminable

2022-01* Our Finance Director (FD) created a tracking form for Journal Entries which included back-up materials on September 27, 2022. FD started using the form to create a trail and continued through mid-January 2023, at that time the FD started using the form that the Executive Director (ED) created. There was a miss commination between the audit reviewer and the FD. Some of these transactions were signed off and some were not. Consistency with the signing was the major problem, but the FD did review with the ED/and or COO/IT during the billing process. Process has been implemented that when adjustments are deemed necessary, approved documentation will be present to support the changes and the journal entries will be reviewed and approved by the department director or executive director. *Responsible person: Judith Gidley, Executive Director

2021-002

Department of Housing and Urban Development Department of Health and Human Services Material Weaknesses Condition: Multiple reallocations of salaries related expenditures and benefits that are allocated based on time were not supported by underlying approved timesheets used to document the allocation basis for the allocation of salaries and related expenditures. Criteria: The allocations are made based on the time distributions updated each payroll period to reflect the time recorded on the reviewed and approved timesheets. Cause: The allocations are recorded based on distribution table data updated each time a new payroll is processed. As a result, if the salaries and related expenditures cost allocations are not recorded on a timely basis the appropriate distribution table data will not reflect the appropriate payroll period data and the error will not be detected by the current internal control structure. Effect: Due to the untimely recording of salaries and related expenditures based on time, the expenditures allocated for the various programs are based on the incorrect supporting time data. Recommendation: BFCAC needs to implement internal control procedures to ensure that allocated salaries and related expenditures are recorded on a timely basis and reflect the appropriate supporting distribution allocation time data. Questioned Costs: Undeterminable

2022-02* BFCAC will implement internal control procedures to ensure that allocated salaries and related expenditures are recorded on a timely basis and reflect the appropriate supporting distribution allocation time data *Responsible person: Judith Gidley, Executive Director

Department of Housing and Urban Development Material Weaknesses Condition: The internal controls over eligible recipients? rental assistance payments did not detect that the client received the incorrect subsidy amounts due to income changes not being verified at the time of notification from the client and/or having the incorrect subsidy amount be paid to the applicable landlord. Criteria: Internal controls should be in place to ensure that all eligible recipients receive the appropriate level of rental subsidy based on the income calculation supported by income documentation provided by clients Cause: Internal control policies did not include procedures for verifying that all income change information data received from supported clients is captured in the client files and rental subsidies adjusted for supportive payments made to applicable landlords. Effect: The lack of internal controls led to clients receiving incorrectly calculated subsidy payment amounts. Recommendation: BFCAC should adopt internal control procedures to ensure that all supporting income documentation provided by clients is reevaluated and subsidy amounts adjusted and that approved landlord vendor payments reflect the updated subsidy amounts.

2022-03* BFCAC has adopted internal controls to ensure that all supporting income documentation provided by clients is reevaluated and subsidy amounts adjusted and that approved landlord vendor payments reflect the updated subsidy amounts. The following processes has now been formalized and implemented regarding the following: ? Initial Income Calculation ? Income changes (up or down) ? Re-Certification ? Household size (up or down) ? Documentation Review ? Utility Allowance (up or down) ? Rental Increase Any and all changes listed above require a file review and sign off by either the Program Manager or the Housing Department Director prior to payment authorization. *Responsible person: Judith Gidley, Executive Director

Material Weaknesses Condition: Multiple reallocations of salaries and related expenditures were not supported by underlying approved timesheets used to document the allocation basis for the allocation of salaries and related expenditures. Criteria: The reallocations were made via journal entries in which no additional supporting documentation was present to justify the reallocation of expenditures. Cause: Journal entries were used to reallocate salaries and related expenses without justification documentation and journal entries recorded were not reviewed or approved by someone other than the person authorized to record the journal entry. Effect: Because of the failure to follow BFCAC?s policy of allocating salaries and related expenditures based on time charged and documented, expenditures were reallocated with no justification or documentation to support the reallocation. Recommendation: BFCAC needs to consistently follow its allocation methodology regarding salaries and related expenditures which allocates these expenditures based on supporting approved timesheets for hours worked. If any adjustments are deemed necessary, approved documentation should be present to support the changes and the journal entries should be reviewed and approved by the approving program manager or executive director. Questioned Costs: Undeterminable

2021-02 BFCAC?s Executive Director has reviewed the agency?s Financial Policies and Procedures and will conduct hands-on refresher training for the Finance Director, accounting staff, and all department directors. All future Journal Entries submitted for correction will be signed off by the Executive Director or the Department Director for whose program is affected by the requested change. All staff will follow the approved Financial Policies and Procedures when processing timesheets.