Audit 19140

Finding No. 2022-001: Allowable Costs\Cost Principles (Compliance Requirement B) Agency and Award: Department of Housing and Urban Development, Prince George?s County Department of Housing and Community Development. The Award title is Community Development Block Grant /Entitlement Grants. Condition: During the audit testing of activities allowed or unallowed and allowable costs/cost principles in accordance with the requirements of 2 CFR Part 200, Appendix XI Compliance Supplement, it was determined that three invoices totaling $82,955 were submitted to two separate government agencies for reimbursement of expenditures incurred during the fiscal year ended June 30, 2022. As a result, revenue and expenses were overstated on the audited financial statements, and expenses were overstated on the Schedule of Expenditures of Federal Awards by $82,955. Criteria: In accordance with 2 CFR Part 200, Appendix XI Compliance Supplement, federal funding received directly or indirectly from the Department of Housing and Urban Development must adhere to certain cost principles with respect to allowable costs. Submitting the same invoice for expense reimbursement to two or more different governmental and/or non-governmental agencies would be considered a disallowed costs to the non-granting authority. Cause: Internal controls over financial reporting were not operating effectively to prevent or detect an error involving a duplicate request for reimbursement of the same invoices that were issued to two separate government agencies. Effect: As a result of not having proper and effective controls in place over the financial reporting process, the schedule of expenditure of federal awards report was materially misstated by the duplicate reimbursement of expenditures. In addition, the auditors had to propose an adjusting journal entry to correct the error and record a payable due to the government agency in the amount of $82,955. Context and Questioned cost: The auditor selected and tested the major program listed in the SEFA, which had a total of $857,796 in federal grant program expenditures. The test results showed that multiple invoices were submitted for reimbursement twice, resulting in questioned costs totaling $82,955 Repeat Finding: No Recommendations: We recommend that HIP implement procedures that will improve the tracking of expenditures with respect to federal and non-federal funds. Specifically, the spending of all grant awards should be separately tracked and monitored based on the terms of the grant agreement. In addition, the expenditures should be reconciled to the grant amount and budget on a monthly basis. Furthermore, the reconciliation of the expenditures to the grant related documents should be reviewed and approved by the Executive Director or a designee with suitable skills, knowledge and experience in this area. View of Responsible Officials and Planned Corrective Action: See Corrective Action Plan

Finding No. 2022-001: Allowable Costs\Cost Principles (Compliance Requirement B) Agency and Award: Department of Housing and Urban Development, Prince George?s County Department of Housing and Community Development. The Award title is Community Development Block Grant /Entitlement Grants. Condition: During the audit testing of activities allowed or unallowed and allowable costs/cost principles in accordance with the requirements of 2 CFR Part 200, Appendix XI Compliance Supplement, it was determined that three invoices totaling $82,955 were submitted to two separate government agencies for reimbursement of expenditures incurred during the fiscal year ended June 30, 2022. As a result, revenue and expenses were overstated on the audited financial statements, and expenses were overstated on the Schedule of Expenditures of Federal Awards by $82,955. Criteria: In accordance with 2 CFR Part 200, Appendix XI Compliance Supplement, federal funding received directly or indirectly from the Department of Housing and Urban Development must adhere to certain cost principles with respect to allowable costs. Submitting the same invoice for expense reimbursement to two or more different governmental and/or non-governmental agencies would be considered a disallowed costs to the non-granting authority. Cause: Internal controls over financial reporting were not operating effectively to prevent or detect an error involving a duplicate request for reimbursement of the same invoices that were issued to two separate government agencies. Effect: As a result of not having proper and effective controls in place over the financial reporting process, the schedule of expenditure of federal awards report was materially misstated by the duplicate reimbursement of expenditures. In addition, the auditors had to propose an adjusting journal entry to correct the error and record a payable due to the government agency in the amount of $82,955. Context and Questioned cost: The auditor selected and tested the major program listed in the SEFA, which had a total of $857,796 in federal grant program expenditures. The test results showed that multiple invoices were submitted for reimbursement twice, resulting in questioned costs totaling $82,955 Repeat Finding: No Recommendations: We recommend that HIP implement procedures that will improve the tracking of expenditures with respect to federal and non-federal funds. Specifically, the spending of all grant awards should be separately tracked and monitored based on the terms of the grant agreement. In addition, the expenditures should be reconciled to the grant amount and budget on a monthly basis. Furthermore, the reconciliation of the expenditures to the grant related documents should be reviewed and approved by the Executive Director or a designee with suitable skills, knowledge and experience in this area. View of Responsible Officials and Planned Corrective Action: See Corrective Action Plan