Last updated on March 4th, 2024
Financial audits are a crucial part of any organization’s financial health, and public housing authorities are no exception. Financial audits are conducted under Government Auditing Standards, issued by Comptroller General of the United States. A financial audit provides an independent assessment of an organization’s financial statements, which in turn ensures transparency, accountability, and a strong foundation for future planning. However, the process can be daunting without proper preparation. Here’s a guide on how public housing authorities can prepare for the compliance aspect of a single audit.
A good place to start is with the audit requirements. These requirements may be outlined in grant agreements, regulatory requirements, or the U.S Department of Housing and Urban Development (HUD) guidelines. Familiarize yourself with these requirements to ensure that your financial statements align with them. It is also beneficial to keep abreast of any changes in audit requirements to avoid non-compliance.
Next, conduct an internal review of your financial records. This process involves examining your financial transactions, supporting documents, and accounting practices. It’s crucial to ensure all transactions are recorded accurately and all supporting documents, such as receipts, invoices, and bank statements, are organized and readily available. Moreover, review your internal controls to ensure they are robust and effective in preventing and detecting fraud or errors.
Ensure that your accounting systems and procedures are up to standard. This includes maintaining accurate and complete records, implementing segregation of duties, and ensuring the reconciliation of accounts. Regularly update your accounting software to the latest version to benefit from improved features and enhanced security.
Preparing the Schedule of Expenditures of Federal Awards (SEFA) is also a vital part of audit preparation. The SEFA is a comprehensive list of all federal awards expended during the fiscal year. It should be prepared in accordance with Government or yellow book auditing standards, as well as the Compliance Supplement which is updated annually. Be sure to include all necessary information such as the grantor’s name, the Assistance Listing Number (formerly Catalog of Federal Domestic Assistance (CFDA) number), and the amount of expenditures.
Communication is key in audit preparation. Regular communication with the auditor will ensure a smoother process. Provide all necessary information and clarify any changes in your financial system or operations. Keep your staff informed about the audit process, what is expected of them, and the timeline. This will help alleviate any potential anxiety and promote cooperation during the audit.
Finally, do not forget to review your previous audit findings. If there were any deficiencies or material weaknesses identified in the previous audit, ensure that corrective actions have been taken. This will not only reduce the likelihood of repeated findings but also demonstrate your commitment to improving your financial management practices.
A financial audit can be a daunting task, but with proper preparation, it can be a constructive process that strengthens your organization’s financial health. Remember, audits are not just about compliance. They are a tool for improving your financial practices, enhancing transparency, and ensuring the effective use of public resources.
If you have any questions or need any audit, accounting, tax, or advisory support, please know RBT CPAs is here for you. We’ve been proudly serving municipalities, businesses, non-profits, and individuals in the Hudson Valley for over 50 years. Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.
RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.