Housing Authority of Weld County

Federal Program: Assistance Listing #14.871 - Section 8 Housing Choice Vouchers.

Criteria: The green book requires internal control and segregation of duties.

Condition: The Housing Authority of the City of Greeley did not utilize staff to adequately segregate duties. Internal controls have not been designed to allow for preparation processes and then segregated review processes. Specifically, segregation of duties was not present for the payroll functions, bank reconciliations and journal entries.

Questioned Costs: None.

Cause: The lack of adequate policies and procedures regarding segregation of duties can be attributed to management's oversight. Management has not established the necessary internal controls to ensure proper accountability and oversight.

Effect: Increased risks of errors and potential fraud within key functions such as payroll, bank reconciliations, and journal entries.

Recommendation: We recommended the Authority develop clear policies that define roles and responsibilities, ensuring clear segregation of duties across all critical functions. Hiring additional staff or reassigning existing staff to ensure that no individual has control over multiple critical functions. Create a review process where management or a designated committee regularly reviews key functions to ensure adherence to policies.

Management’s Response: Management will adopt policies and procedures that will enhance the segregation of duties with the accounting functions.

Federal Program: Assistance Listing #14.871 - Section 8 Housing Choice Vouchers.

Criteria: SAS 99 requires proper documented internal control over journal entries.

Condition: The Authority does not have an organized journal voucher system that ensures transparency and accountability in financial reporting. There is not a designated preparer, reviewer, and authorizer.

Questioned Costs: None.

Cause: Absence of clear guidelines and procedures for creating, approving, and recording journal vouchers can lead to inconsistencies. Employees are not adequately trained on how to segregate their duties within the journal voucher system.Effect: The absence of a structured approval process can make it difficult to hold individuals accountable for financial entries, increasing the risk of fraud or misuse of funds. Variability in how transactions are recorded can lead to inconsistencies, making it challenging to maintain accurate and reliable financial records. Without a formalized process for documenting transactions, errors in recording may go unnoticed, leading to inaccurate financial statements. The inability to easily document and authorize adjustments or corrections can result in delays and increased workload for staff. There is a regulatory compliance risk that can potentially lead to penalties.

Recommendation: There should be an individual responsible for initiating the journal entry. A person who verifies the accuracy and appropriateness of the entry. A manager or finance officer responsible for the final approval and authorization of the transaction. Ensure that every journal voucher is backed by adequate supporting documentation, such as invoices, receipts, contracts, or other relevant paperwork that justifies the transaction. Reviewers should follow a standardized checklist to ensure that all key details (such as dates, amounts, account codes, and descriptions) are correct. There should be controls on the approving and posting the journal entries.

Management’s Response: Management will develop and install a journal voucher system which requires approval by a person other than the preparer.