(The Center Square) — Louisiana Road Home Corporation’s lack of internal control over financial reporting for a third year led to numerous errors with cash flows, wages, operating grants, and other issues in 2022.
The Louisiana Legislative Auditor outlined several problems at the Road Home Corporation, also known as the Louisiana Land Trust, in an audit of 2022 finances released last week. The nonprofit Road Home Corporation was created in 2006 to help property owners impacted by Hurricanes Katrina and Rita, later becoming the Louisiana Land Trust.
“For the third consecutive year, LLT did not have adequate controls over financial reporting to ensure its financial statements were accurate and complete,” auditors wrote. “As a result, LLT submitted an inaccurate Annual Fiscal Report to the Division of Administration, Office of Statewide Reporting and Accounting Policy that contained (several) errors requiring adjustment.”
The issues involved an overstated cash balance of $2,622, as well as a capital assets balance overstated by $65,493.
The latter stemmed from a beginning year balance overstated by $87,596 for the Road Home properties that were no longer in inventory or recorded at the incorrect value, $63,581 overstated for 2022 Road Home property additions with incorrect values, and deletions overstated by $85,684 for Road Home properties with incorrect values.
“LLT’s accounts receivables were understated by $67,283 due to an error in the calculation of LLT’s estimated receivables due from the Office of Community Development,” according to the report. “LLT’s accounts payables were overstated by $22,650 due to LLT overstating the beginning accounts payable balance by $3,875 and property portfolio expenses by $18,775.”
Those misstatements resulted in operating grants and contracts understated by $67,283; operating expenses overstated by $30,755; capital grants and contributions overstated by $180; and nonoperating expenses overstated by $22,283.
Other issues involved improper consideration of accrued wages and compensated absences, and errors with note disclosures for cash, disaggregation of receivables and payables, capital assets, compensated absences, property portfolio expenses, and other expenses.
“These errors occurred because management did not have an adequate process to review journal entries recorded in the general ledger to ensure the entries were accurate, based on sufficient support, and, where applicable, based on reasonable estimation methods,” auditors wrote. “In addition, management did not perform an adequate review of the AFR, financial statements, and note disclosures, which were prepared by a contracted CPA.”
Louisiana Land Trust Executive Director Michael Taylor responded to the audit report in a letter on June 20 that concurred with the findings and outlined a corrective action plan.
That plan includes “detailed internal training with all staff on finances and financial reporting,” and monthly “all-hand meetings” to review finances, Taylor wrote.
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