Finding 2023-001 – Allowable Costs and Activities – Compliance and Control Finding
Federal Award. No. 14.231 Emergency Solutions Grant Program – COVID 19
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Entity: Missouri Department of Social Services
Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions
for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering
Federal funds in a manner consistent with underlying agreements, program objectives and the terms and
conditions of the Federal award.
Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing.
However, during the current fiscal year, management of the Commission identified certain questionable rental
assistance payments. Certain payments have been reported to the appropriate agencies in accordance with
regulatory requirements.
Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards
available and the presence of new requirements for the program were burdensome for management to disburse
in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program
involves a very large number of applications and a high volume of transactions resulting in exposure to error
and irregularity.
Effect: Instances of known and suspected noncompliance were identified by the Commission.
Questioned Costs: The Commission has identified $320,658 of known questioned costs in fiscal year 2023.
Context: Approximately 1,300 vendors are set up in the Commission’s system for application of emergency
rental assistance. Of the vendors with applications approved for funding, 134 are considered to be known
noncompliance for a total amount of known questioned costs of $2,112,621 since fiscal year 2021. After the
identification of the first instance of noncompliance, the Commission adjusted and enhanced its procedures for
evaluating current and existing applications. As the Commission reviews future applications following their
updated policies and procedures, additional vendors could be flagged to investigate prior payments for potential
ineligible costs.
Identification As A Repeat Finding: Repeat of Finding No. 2022-001.
Recommendation: We recommend that management continue to apply resources devoted to mitigating and
preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide
additional training to employees as well as third parties responsible for reviewing and approving applications.
Internal controls over allowable costs and activities should ensure procedural improvements are implemented
properly.
Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of
the report.
Anticipated Completion Date: The Commission implemented additional compliance review procedures
during fiscal years 2021 and 2022, reviewed applications to identify potentially fraudulent applications during
fiscal years 2022 and 2023 and expects to conclude its investigation of identified cases during fiscal year 2024.
Contact Person: Steve Whitson, Director of Community Programs
Finding 2023-001 – Allowable Costs and Activities – Compliance and Control Finding
Federal Award. No. 14.231 Emergency Solutions Grant Program – COVID 19
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Entity: Missouri Department of Social Services
Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions
for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering
Federal funds in a manner consistent with underlying agreements, program objectives and the terms and
conditions of the Federal award.
Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing.
However, during the current fiscal year, management of the Commission identified certain questionable rental
assistance payments. Certain payments have been reported to the appropriate agencies in accordance with
regulatory requirements.
Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards
available and the presence of new requirements for the program were burdensome for management to disburse
in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program
involves a very large number of applications and a high volume of transactions resulting in exposure to error
and irregularity.
Effect: Instances of known and suspected noncompliance were identified by the Commission.
Questioned Costs: The Commission has identified $320,658 of known questioned costs in fiscal year 2023.
Context: Approximately 1,300 vendors are set up in the Commission’s system for application of emergency
rental assistance. Of the vendors with applications approved for funding, 134 are considered to be known
noncompliance for a total amount of known questioned costs of $2,112,621 since fiscal year 2021. After the
identification of the first instance of noncompliance, the Commission adjusted and enhanced its procedures for
evaluating current and existing applications. As the Commission reviews future applications following their
updated policies and procedures, additional vendors could be flagged to investigate prior payments for potential
ineligible costs.
Identification As A Repeat Finding: Repeat of Finding No. 2022-001.
Recommendation: We recommend that management continue to apply resources devoted to mitigating and
preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide
additional training to employees as well as third parties responsible for reviewing and approving applications.
Internal controls over allowable costs and activities should ensure procedural improvements are implemented
properly.
Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of
the report.
Anticipated Completion Date: The Commission implemented additional compliance review procedures
during fiscal years 2021 and 2022, reviewed applications to identify potentially fraudulent applications during
fiscal years 2022 and 2023 and expects to conclude its investigation of identified cases during fiscal year 2024.
Contact Person: Steve Whitson, Director of Community Programs
Finding 2023-002 – Allowable Costs and Activities, Eligibility – Compliance and Control Finding
Federal Award. No. 21.023 Emergency Rental Assistance Program – COVID 19
Federal Agency: U.S. Department of Treasury
Pass-Through Entity: Missouri Department of Economic Development
Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions
for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering
Federal funds in a manner consistent with underlying agreements, program objectives and the terms and
conditions of the Federal award.
Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing.
However, during the current fiscal year, management of the Commission identified certain questionable rental
assistance payments. Certain payments have been reported to the appropriate agencies in accordance with
regulatory requirements and other payments are pending further investigation.
Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards
available and the presence of new requirements under a new program were burdensome for management to
disburse in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the
program involves a very large number of applications and a high volume of transactions resulting in exposure to
error and irregularity.
Effect: Instances of known and suspected noncompliance were identified by the Commission.
Questioned Costs: The Commission has identified $1,613,771 of known questioned costs and is actively
investigating an additional $2,956,036 of potential questioned costs in fiscal year 2023.
Context: Approximately 33,000 vendors are set up in the Commission’s system for application of emergency
rental assistance. Of the vendors with applications approved for funding, 350 are considered to be known
noncompliance and 225 are being investigated for potential noncompliance. Since fiscal year 2021, $22,461,431
of costs are actively being investigated by the Commission. Of this amount, the Commission has identified
$12,293,592 of known questioned costs and $10,167,839 of potential questioned costs that are still being
investigated. After the identification of the first instance of noncompliance, the Commission adjusted and
enhanced its procedures for evaluating current and existing applications. As the Commission reviews future
applications following their updated policies and procedures, additional vendors could be flagged to investigate
prior payments for potential ineligible costs. As the direct rental and utility assistance provided in accordance
with this program was concluded and the final disbursements made during February 2023, additional internal
metrics and compliance review processes are being developed to apply a consistent process for examining any
outstanding questioned costs and to make a final determination regarding the eligibility of disbursed funds.
Identification As A Repeat Finding: Repeat of Finding No. 2022-002.
Recommendation: We recommend that management continue to apply resources devoted to mitigating and
preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide
additional training to employees as well as third parties responsible for reviewing and approving applications.
Internal controls over allowable costs and activities should ensure procedural improvements are implemented
properly.
Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of
the report.
Anticipated Completion Date: The Commission implemented additional compliance review procedures
during fiscal years 2021 and 2022 and expects to conclude its investigation of the fiscal year identified cases
during calendar year 2024.
Contact Person: Steve Whitson, Director of Community Programs
Finding 2023-003 – Allowable Costs and Activities, Eligibility – Compliance Finding
Federal Award. No. 21.026 Homeowner Assistance Fund – COVID 19
Federal Agency: U.S. Department of Treasury
Pass-Through Entity: Missouri Department of Economic Development
Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions
for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering
Federal funds in a manner consistent with underlying agreements, program objectives and the terms and
conditions of the Federal award.
Condition: The Homeowner Assistance Fund was not tested as a major program in 2023. However, during the
current fiscal year, management of the Commission identified certain questionable mortgage assistance
payments. Certain payments have been reported to the appropriate agencies in accordance with regulatory
requirements.
Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards
available and the presence of new requirements for the program were burdensome for management to disburse
in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program
involves a very large number of applications and a high volume of transactions resulting in exposure to error
and irregularity.
Effect: Instances of known and suspected noncompliance were identified by the Commission.
Questioned Costs: The Commission has identified $174,926 of known questioned costs in fiscal year 2023.
Context: Approximately 220 mortgage loan servicers or financial institutions are set up to receive mortgage
assistance payments on behalf of mortgagors. The Commission was alerted by another housing finance agency
through an industry group regarding a third-party entity impersonating a mortgage company. Upon
investigation, the Commission determined the entity was in noncompliance with the program requirements. The
Commission reviewed its onboarding procedures for mortgage loan servicers and enhanced its documentation
review to prevent noncompliant mortgage loan servicers from participating in the program.
Identification As A Repeat Finding: Not a Repeat Finding.
Recommendation: We recommend that management continue to apply resources devoted to mitigating and
preventing further exposure to noncompliance. Additionally, we recommend the Commission review and
consider improvements to its onboarding procedures and related controls for mortgage loan servicers.
Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of
the report.
Anticipated Completion Date: The Commission implemented additional compliance review procedures
during fiscal year 2023 and completed its investigation of the identified case.
Contact Person: Steve Whitson, Director of Community Program
Finding 2023-001 – Allowable Costs and Activities – Compliance and Control Finding
Federal Award. No. 14.231 Emergency Solutions Grant Program – COVID 19
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Entity: Missouri Department of Social Services
Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions
for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering
Federal funds in a manner consistent with underlying agreements, program objectives and the terms and
conditions of the Federal award.
Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing.
However, during the current fiscal year, management of the Commission identified certain questionable rental
assistance payments. Certain payments have been reported to the appropriate agencies in accordance with
regulatory requirements.
Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards
available and the presence of new requirements for the program were burdensome for management to disburse
in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program
involves a very large number of applications and a high volume of transactions resulting in exposure to error
and irregularity.
Effect: Instances of known and suspected noncompliance were identified by the Commission.
Questioned Costs: The Commission has identified $320,658 of known questioned costs in fiscal year 2023.
Context: Approximately 1,300 vendors are set up in the Commission’s system for application of emergency
rental assistance. Of the vendors with applications approved for funding, 134 are considered to be known
noncompliance for a total amount of known questioned costs of $2,112,621 since fiscal year 2021. After the
identification of the first instance of noncompliance, the Commission adjusted and enhanced its procedures for
evaluating current and existing applications. As the Commission reviews future applications following their
updated policies and procedures, additional vendors could be flagged to investigate prior payments for potential
ineligible costs.
Identification As A Repeat Finding: Repeat of Finding No. 2022-001.
Recommendation: We recommend that management continue to apply resources devoted to mitigating and
preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide
additional training to employees as well as third parties responsible for reviewing and approving applications.
Internal controls over allowable costs and activities should ensure procedural improvements are implemented
properly.
Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of
the report.
Anticipated Completion Date: The Commission implemented additional compliance review procedures
during fiscal years 2021 and 2022, reviewed applications to identify potentially fraudulent applications during
fiscal years 2022 and 2023 and expects to conclude its investigation of identified cases during fiscal year 2024.
Contact Person: Steve Whitson, Director of Community Programs
Finding 2023-001 – Allowable Costs and Activities – Compliance and Control Finding
Federal Award. No. 14.231 Emergency Solutions Grant Program – COVID 19
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Entity: Missouri Department of Social Services
Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions
for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering
Federal funds in a manner consistent with underlying agreements, program objectives and the terms and
conditions of the Federal award.
Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing.
However, during the current fiscal year, management of the Commission identified certain questionable rental
assistance payments. Certain payments have been reported to the appropriate agencies in accordance with
regulatory requirements.
Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards
available and the presence of new requirements for the program were burdensome for management to disburse
in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program
involves a very large number of applications and a high volume of transactions resulting in exposure to error
and irregularity.
Effect: Instances of known and suspected noncompliance were identified by the Commission.
Questioned Costs: The Commission has identified $320,658 of known questioned costs in fiscal year 2023.
Context: Approximately 1,300 vendors are set up in the Commission’s system for application of emergency
rental assistance. Of the vendors with applications approved for funding, 134 are considered to be known
noncompliance for a total amount of known questioned costs of $2,112,621 since fiscal year 2021. After the
identification of the first instance of noncompliance, the Commission adjusted and enhanced its procedures for
evaluating current and existing applications. As the Commission reviews future applications following their
updated policies and procedures, additional vendors could be flagged to investigate prior payments for potential
ineligible costs.
Identification As A Repeat Finding: Repeat of Finding No. 2022-001.
Recommendation: We recommend that management continue to apply resources devoted to mitigating and
preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide
additional training to employees as well as third parties responsible for reviewing and approving applications.
Internal controls over allowable costs and activities should ensure procedural improvements are implemented
properly.
Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of
the report.
Anticipated Completion Date: The Commission implemented additional compliance review procedures
during fiscal years 2021 and 2022, reviewed applications to identify potentially fraudulent applications during
fiscal years 2022 and 2023 and expects to conclude its investigation of identified cases during fiscal year 2024.
Contact Person: Steve Whitson, Director of Community Programs
Finding 2023-002 – Allowable Costs and Activities, Eligibility – Compliance and Control Finding
Federal Award. No. 21.023 Emergency Rental Assistance Program – COVID 19
Federal Agency: U.S. Department of Treasury
Pass-Through Entity: Missouri Department of Economic Development
Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions
for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering
Federal funds in a manner consistent with underlying agreements, program objectives and the terms and
conditions of the Federal award.
Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing.
However, during the current fiscal year, management of the Commission identified certain questionable rental
assistance payments. Certain payments have been reported to the appropriate agencies in accordance with
regulatory requirements and other payments are pending further investigation.
Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards
available and the presence of new requirements under a new program were burdensome for management to
disburse in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the
program involves a very large number of applications and a high volume of transactions resulting in exposure to
error and irregularity.
Effect: Instances of known and suspected noncompliance were identified by the Commission.
Questioned Costs: The Commission has identified $1,613,771 of known questioned costs and is actively
investigating an additional $2,956,036 of potential questioned costs in fiscal year 2023.
Context: Approximately 33,000 vendors are set up in the Commission’s system for application of emergency
rental assistance. Of the vendors with applications approved for funding, 350 are considered to be known
noncompliance and 225 are being investigated for potential noncompliance. Since fiscal year 2021, $22,461,431
of costs are actively being investigated by the Commission. Of this amount, the Commission has identified
$12,293,592 of known questioned costs and $10,167,839 of potential questioned costs that are still being
investigated. After the identification of the first instance of noncompliance, the Commission adjusted and
enhanced its procedures for evaluating current and existing applications. As the Commission reviews future
applications following their updated policies and procedures, additional vendors could be flagged to investigate
prior payments for potential ineligible costs. As the direct rental and utility assistance provided in accordance
with this program was concluded and the final disbursements made during February 2023, additional internal
metrics and compliance review processes are being developed to apply a consistent process for examining any
outstanding questioned costs and to make a final determination regarding the eligibility of disbursed funds.
Identification As A Repeat Finding: Repeat of Finding No. 2022-002.
Recommendation: We recommend that management continue to apply resources devoted to mitigating and
preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide
additional training to employees as well as third parties responsible for reviewing and approving applications.
Internal controls over allowable costs and activities should ensure procedural improvements are implemented
properly.
Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of
the report.
Anticipated Completion Date: The Commission implemented additional compliance review procedures
during fiscal years 2021 and 2022 and expects to conclude its investigation of the fiscal year identified cases
during calendar year 2024.
Contact Person: Steve Whitson, Director of Community Programs
Finding 2023-003 – Allowable Costs and Activities, Eligibility – Compliance Finding
Federal Award. No. 21.026 Homeowner Assistance Fund – COVID 19
Federal Agency: U.S. Department of Treasury
Pass-Through Entity: Missouri Department of Economic Development
Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions
for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering
Federal funds in a manner consistent with underlying agreements, program objectives and the terms and
conditions of the Federal award.
Condition: The Homeowner Assistance Fund was not tested as a major program in 2023. However, during the
current fiscal year, management of the Commission identified certain questionable mortgage assistance
payments. Certain payments have been reported to the appropriate agencies in accordance with regulatory
requirements.
Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards
available and the presence of new requirements for the program were burdensome for management to disburse
in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program
involves a very large number of applications and a high volume of transactions resulting in exposure to error
and irregularity.
Effect: Instances of known and suspected noncompliance were identified by the Commission.
Questioned Costs: The Commission has identified $174,926 of known questioned costs in fiscal year 2023.
Context: Approximately 220 mortgage loan servicers or financial institutions are set up to receive mortgage
assistance payments on behalf of mortgagors. The Commission was alerted by another housing finance agency
through an industry group regarding a third-party entity impersonating a mortgage company. Upon
investigation, the Commission determined the entity was in noncompliance with the program requirements. The
Commission reviewed its onboarding procedures for mortgage loan servicers and enhanced its documentation
review to prevent noncompliant mortgage loan servicers from participating in the program.
Identification As A Repeat Finding: Not a Repeat Finding.
Recommendation: We recommend that management continue to apply resources devoted to mitigating and
preventing further exposure to noncompliance. Additionally, we recommend the Commission review and
consider improvements to its onboarding procedures and related controls for mortgage loan servicers.
Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of
the report.
Anticipated Completion Date: The Commission implemented additional compliance review procedures
during fiscal year 2023 and completed its investigation of the identified case.
Contact Person: Steve Whitson, Director of Community Program