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13 <br /> Slide#16 <br /> Orange County,North Carolina <br /> Audit Findings(Continued) <br /> • 2024-003 Annual Financial Closeout and Preparation of Records for the Audit <br /> Issue: The County's review and manual adjustments were not sufficient to prevent,or detect and correct,material <br /> misstatements in the County's financial statements. <br /> Cause/Context During the audit for the year ended June 30,2024,material audit adjustments were required to <br /> correct current year balances in several audit areas: <br /> Audit adjustments totaling approximately$6,350,000 were required to properly reflect debt proceeds,debt <br /> payments,debt premiums and interest expenditures/expenses. <br /> Audit adjustments totaling approximately$1,100,000 were required to correct the reporting of the Counts <br /> capital assets.The County incorrectly expensed construction costs that were capital in nature and should have <br /> been reported as capital assets. <br /> Across several of the County's funds,issues were noted with both accounts payable and accounts receivable <br /> balances. The amounts reported in the County's general ledger did not agree and reconcile with the <br /> underlying detailed listings or subsidiary ledgers. These differences led to delays in receiving from the County <br /> staff final accounts receivable and accounts payable balances with proper documentation to support the <br /> ending balances reported. <br /> Effect: While the errors were identified and corrected during the audit,the incomplete financial close process <br /> resulted in increased reconciliation efforts from County staff,increased potential risk for misstatements,and delays <br /> in finalizing financial statements,requiring additional reviewand adjustments. <br /> County Response:The County acknowledges the audit f nding and is committed to improving its financial reporting <br /> processes and internal controls to ensure compliance with generally accepted accounting principles(GAAP).We <br /> recognize the need for enhanced financial statement preparation,reconciliations,and timely review processes to <br /> prevent material misstatements and ensure accurate financial reporting. <br /> Auditors Discussion&Analysis(AD&A) <br /> June 30,2024 <br /> Commissioner McKee emphasized that the issues here are not missing money, but mis- <br /> entries into ledgers. <br /> Slide #17 <br /> /FTT� <br /> 1 Orange County,North Carolina <br /> Audit Findings(Continued) <br /> • 2024-004 Reporting Requirements for Section 8 Housing Program <br /> Public Housing Agencies(PHAs)are required to submit timely a Financial Assessment Sub-system(FASS-PH)GAAP- <br /> based unaudited and audited financial information electronically to HUD. In the course of performing our Single <br /> Audit testing,we noted the County had not submitted the 2023 PASS-PH report due to turnover in key positions. <br /> No questioned costs noted. <br /> The County completed the FASS-PH report and it has been submitted to HUD for 2023;additionally,the County has <br /> added this reportto its annual year-end checklistgoing forward. <br /> Management Point(Recommendation) <br /> • Accounting for Special Revenue Funds <br /> During our review of the Counts financial statements,we noted the DSS Payee Fund did not have any revenue or <br /> expenditure activity for the fiscal year under audit. Based on our review of the general ledger activity,it appears the <br /> County is still accounting for this fund as if it was still a custodial fund of the County where all amounts are received <br /> as cash and offset with a corresponding liability. With the change in accounting standard that was brought about by <br /> GASB Statement No,84,FiducioryActivities,this fund was reclassified to a special revenue fund in previous years and <br /> should be reflecting the inflows it receives during the fiscal year as revenues and conversely,the outflows as <br /> expenditures. Due to the fact that the activity for the fiscal year ended June 30,2024,was not material,an audit <br /> adjustment to reclassify the activity was not required. However,we recommend County staff implement additional <br /> internal controls or additional annual closeout procedures to the ensure the amounts are properly recorded in <br /> accordance with generally accepted accounting principles(GAAP). <br /> Auditor's Discussion&Analysis(AD&A) <br /> June 30,2024 <br />