United States Department of the Treasury
Reference Number: 2023-004
Program: 21.023 COVID-19 Emergency Rental Assistance
Federal Award Number: ERA-2101123208 and ERAE0280
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Eligibility
Condition: Audit testing of a statistical sample of 40 cases processed during the year ended June 30, 2023, revealed the following: Two cases where the applicant received assistance in excess of the allowable maximum assistance, resulting in overpayments totaling $7,090. Four cases (including the two referenced previously) where ERA 1 was charged more than the allowable maximum assistance. The overpayments resulted from errors in applying statutorily established limits for rental assistance. These overpayments were subsequently moved to ERA 2 as described in the Context section. A similar finding was noted during the audit of the year ended June 30, 2022. Refer to Finding 2022-006. Context: During the year ended June 30, 2023, DSHA approved and disbursed assistance for 12,948 cases totaling $49,154,163. During the year ended June 30, 2023, DSHA undertook extensive analysis of ERA assistance payments. DSHA determined the following: Assistance in excess of 15 months totaling approximately $948,000 was charged to ERA 1. The related cases were disclosed to the United States Department of the Treasury and the assistance was reclassified to ERA 2. Certain assistance in excess of 18 months totaling approximately $1,070,000 was paid. This amount was not reported as an allowable cost nor was it reported on the June 30, 2023 Schedule of Expenditures of Federal Awards. The related cases were disclosed to the United States Department of the Treasury. Criteria: The following summarizes the applicable portions of the ERA program requirements: United States Department of the Treasury Program FAQs updated July 6, 2022: ERA1 allows an eligible household to receive up to 12 months of assistance (plus an additional three (3) months, if necessary, to ensure housing stability for the household, subject to the availability of funds). ERA2 allows an eligible household to receive up to 15 months of assistance (plus an additional three (3) months, if necessary, to ensure housing stability for the household, subject to the availability of funds). Grantees must establish policies and procedures to govern the implementation of their ERA programs consistent with the statutes and the ERA program requirements. Questioned Costs: $7,090 of assistance overpayments. Effect: Federal program expenditures of rental assistance were overpaid. Cause: Internal controls over compliance were not appropriately designed, implemented, or operated to appropriately address the risk of noncompliance with the federal program requirements. Data migrated from DSHA’s previous program administration software does not correctly display in the current program administration software contributing to payment errors. Recommendation: We recommend DSHA enhance its policies and procedures for processing rental assistance applications to ensure compliance with the federal program’s requirements.
United States Department of the Treasury
Reference Number: 2023-005
Program: 21.023 COVID-19 Emergency Rental Assistance
Federal Award Number: ERA-2101123208 & ERAE0280
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Reporting; Special Tests and Provisions
Condition: The following conditions were found during audit testing of one ERA1 quarterly report and two
ERA2 quarterly reports: 1. DSHA procedures over the reporting did not include the documentation of the preparation and review of quarterly reports selected for testing. 2. The following reports required by the U.S. Treasury were either not submitted timely, or evidence of their submission date was not available: Grant: ERA1, Reporting Quarter: Friday September 30, 2022, Due Date: Wednesday, November 16,2022, Date Submitted: Not Documented. Grant: ERA2, Reporting Quarter: Friday September 30, 2022, Due Date: Friday, December 16,2022, Date Submitted: Not Documented. Grant: ERA2, Reporting Quarter: Friday March 31, 2023, Due Date: Wednesday, May 17,2023, Date Submitted: Wednesday, May 23. 3. Audit testing of a statistical sample of 40 cases processed during the year ended June 30, 2023, revealed that Area Median Income (AMI) percentage was not calculated correctly for two cases. The AMI percentages calculated at the case level are utilized to support required demographic reporting. 4. Supporting documentation was not retained for information on the reports selected for testing. A review of the reports selected for testing revealed the following: a. The demographic information section of the ERA2 report for the quarter ended March 31, 2023, was not completed. b. The ERA2 report for the quarter ended September 30, 2022, reported administrative expenditures as $7,770,634 which was the amount of ERA award funds approved for participant households. Audit procedures determined that administrative expenditures for the quarter ended September 30, 2022, were approximately $123,000. c. The ERA1 and ERA2 reports for the quarter ended September 30, 2022, report the same amounts expended and obligated, except for the input error noted above. A similar finding was noted during the audit of the year ended June 30, 2022. Refer to finding 2022-008. Criteria: United States Department of the Treasury ERA Program Reporting Guidance version 3.2 was issued March 29, 2022, and provides quarterly reporting deadlines as detailed in the condition. 2 CFR § 200.303 requires the implementation of effective internal controls: “Internal controls requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.” Questioned Costs: None Effect: Reports required by the U.S. Treasury were not submitted timely, accurately, and with contemporaneously prepared supporting documentation. Information necessary for the U.S. Treasury to calculate the required reallocations was not accurately reported on the quarterly reports submitted. Cause: Internal controls over reporting were not appropriately designed, implemented, or operated. DSHA’s internal controls did not capture and report amounts obligated for the operation of the ERA program. The report preparation process utilized reports generated from one application processing system, without taking into account payments processed outside of that system. Recommendation: We recommend DSHA enhance its policies and procedures for preparing and approving required reports prior to submission.
United States Department of the Treasury
Reference Number: 2023-006
Program: 21.026 COVID-19 Homeowner Assistance Fund Program
Federal Award Number: HAF0034
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Allowable Cost
Condition: Reconciliation of the HAF client assistance expenditures for the year ended June 30, 2023, revealed approximately $290,000 of federal funds were held by a vendor and were reported as federal expenditures. During the operation of the program, the vendor received refunds that were not timely remitted to DSHA or utilized to fund assistance. Criteria: The Uniform Guidance Cost Principles requires DSHA to offset credits against program expenditures in 2 CFR 200.406(a): Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Questioned Costs: $290,000. The funds held by the vendor were initially recorded as program costs. During the audit of the year ended June 30, 2023, program costs and revenue were reduced by an audit adjusting journal entry for the amount held by DSHA’s vendor. Effect: Unallowed costs were recorded to the Homeowner Assistance Fund Program during the year ended June 30, 2023. Cause: DSHA was notified by the vendor that a credit was available to be applied to fund future assistance. The vendor did not apply the credit without DSHA’s explicit approval. Recommendation: We recommend DSHA review the design and implementation of internal controls to address the identified weaknesses in internal control.
United States Department of the Treasury
Reference Number: 2023-007
Program: 21.026 COVID-19 Homeowner Assistance Fund Program
Federal Award Number: HAF0034
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Cash Management; Program Income
Condition: During audit testing of the HAF program, we found the following instances of non-compliance. HAF funding received in June 2022 totaling $45 million was deposited into a non-interest-bearing demand account. In March 2023, $21 million was moved to an interest-bearing savings account. Fiscal year 2023 interest earnings of $88,777 on the HAF funds held by DSHA were recognized as program income. Interest earnings in excess of $500 were not annually remitted to the Department of Health and Human Services Payment Management System. Criteria: The HAF program operates in accordance with the requirements of 2 CFR 200.305(b) which requires the following: (8) The non-Federal entity must maintain advance payments of Federal awards in interest-bearing accounts… (9) Interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either Automated Clearing House (ACH) network or a Fedwire Funds Service payment. Questioned Costs: $88,777. Interest income on HAF program funds was initially recorded as program income until it was corrected by an adjusting journal entry. During the audit of the year ended June 30, 2023, interest income was reduced by an audit adjusting journal entry. Effect: HAF program funds were held in a non-interest-bearing account during the period of July 2022 through March 2023. Interest income on HAF program was not timely remitted to the Department of Health and Human Services as required by the federal regulations. Cause: DSHA’s internal controls did not identify HAF program compliance requirements in time to prevent the Conditions noted. Recommendation: We recommend DSHA review the design and implementation of internal controls to address the identified weaknesses in internal control.
United States Department of the Treasury
Reference Number: 2023-008
Program: 21.026 COVID-19 Homeowner Assistance Fund Program
Federal Award Number: HAF0034
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Eligibility; Earmarking; Reporting
Condition: Audit testing of a statistical sample of 41 cases processed during the year ended June 30, 2023, revealed the following: Applicant income was calculated incorrectly for five cases sampled. Of these five cases, two applicants received more months of Future Payment Assistance than allowed by DSHA’s policy, resulting in overpayments totaling $9,799. One applicant received $51,341 in assistance, an overpayment of $1,341. Analysis of assistance for the period of July 1, 2022 through November 12, 2022, identified two homeowners that received in excess of $30,000 of mortgage assistance resulting in overpayments of assistance totaling $3,136. Context: The homeowner income verification process supports the following program functions: Determination of allowable homeowner eligibility for assistance. Determination of allowable Future Payment Assistance (starting in November 2022). Required reporting of assistance by income level. Compliance with the HAF Program Earmarking requirements. Criteria: Eligibility Criteria - DSHA submitted a HAF Grantee Plan to U.S. Department of the Treasury on May 31, 2022. DSHA’s HAF Grantee Plan specifies the following process for the determination of homeowner income: Eligibility Criteria - Continued - DSHA intends to accept written attestations from DE-HAF applicants to ascertain eligibility for the programs (100% of AMI or 150% of AMI depending on the program). DSHA does not anticipate allowing the use of geographic area or other criteria not linked directly to the homeowner’s individual determinants. In addition, while eligibility will be determined with a pass/fail income threshold, later in the application review process a more specific income verification process will be required to establish the amount of monthly mortgage obligation that will be affordable to the homeowner. This income verification process will need to rely on substantiated documentation. This process is consistent with United States Department of the Treasury Homeowner Assistance Fund Guidance issued on June 12, 2023. DSHA’s HAF program began to provide Future Payment Assistance on November 13, 2022 as follows: Applicants between 31.01% - 50% HDTI can be eligible for ‘Reinstatement’ plus up to 3 months of mortgage payments. Applicants with ‘No Income’ or a HDTI 50.01% and above can be eligible for ‘Reinstatement’ plus up to 6 months of mortgage payments. **If in addition to the assistance, applicants will be referred to a HUD-approved Housing Counseling Agency to assist with an action plan beyond the assistance. Earmarking Criteria - The United States Department of the Treasury issued Homeowner Assistance Fund Guidance June 12, 2023, requires that at least 60% of amounts made available to each HAF participant to be used for qualified expenses that assist homeowners having incomes equal to or less than 100% of the area median income or equal to or less than 100% of the median income for the United States, whichever is greater. Any amount not made available to homeowners that meet this income-targeting requirement must be prioritized for assistance to socially disadvantaged individuals, with funds remaining after such prioritization being made available for other eligible homeowners. Reporting Criteria - Homeowner Assistance Fund quarterly reporting requires the submission of Application Data disaggregated by Area Median Income. Maximum Allowed Assistance - DSHA’s program design included maximum assistance as follows: Period: July 1, 2022 - November 12, 2022. Assistance Limitations: Mortgage $30,000; Non-Mortgage $10,000; Total $40,000. Period: November 13, 2022 – June 30,2023. Assistance Limitations: Mortgage N/A; Non-Mortgage N/A; Total $50,000. Questioned Costs: $14,276 of overpayments. Effect: Federal program expenditures for assistance were overpaid. Applicant income determined by assistance calculation process was used for compliance with earmarking requirements and to support required reporting by applicant income level resulting in potential errors in reports submitted to the U.S. Treasury. Cause: Homeowner assistance application processing did not correctly determine verified homeowner income. Recommendation: We recommend DSHA enhance its policies and procedures for processing HAF assistance applications to ensure accurate calculation of verified homeowner income.
United States Department of the Treasury
Reference Number: 2023-009
Program: 21.026 COVID-19 Homeowner Assistance Fund Program
Federal Award Number: HAF0034
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Reporting
Condition: Testing of DSHA’s December 31, 2022 and June 30, 2023 HAF quarterly reports revealed the reports submitted by DSHA reported the same amounts as expended and obligated, for Administrative Expenses and Services, and Counseling & Education. During the year ended June 30, 2023, DSHA entered various contracts for the operation of the program. DSHA’s Annual Reporting did not include data on Socially Disadvantaged Individuals assisted and Area Median Income of households assisted as required by the Program reporting requirements. DSHA did not maintain contemporaneously prepared supporting documentation for the December 31, 2022 and June 30, 2023 quarterly reports or the June 30, 2023 annual report. Criteria: The United States Department of the Treasury Homeowner Assistance Fund Guidance on Participant Compliance and Reporting Responsibilities revised on July 15, 2022, includes the following definitions: Expenditure/Expended means any HAF assistance that has been spent by a HAF participant and/or Subrecipient. Please note, cumulative Expenditures cannot exceed cumulative Obligations. Obligation/Obligated means an order placed for property and services, contracts and subawards made, and similar transactions that require payment (see 2 CFR § 200.1.). Obligated funds include funds that have been Expended. Examples of obligated funds include: HAF funds that have been committed, pledged, or otherwise promised, in writing, to a specific individual or entity as part of a HAF program; HAF funds that have been set aside to cover obligations arising from loan guarantees; HAF funds that have been committed, pledged, or otherwise promised, in writing, as part of a transaction; and HAF funds that have been committed, pledged, or promised, in writing, for allowable administrative expenses (e.g., an executed contract for services). The Homeowner Assistance Fund: Annual Report User Guide Issued October 14, 2022 (Updated October 13, 2023), requires the reporting of outcomes for assistance provided to Homeowners by Area Median Income and Socially Disadvantaged Individuals. Questioned Costs: None Effect: Reports required by the U.S. Treasury were not supported by contemporaneously prepared supporting documentation. Reports submitted to the U.S. Treasury did not include accurate reporting of program obligations. Cause: The report preparation process did not consider executed contracts and agreements to be obligations. Recommendation: We recommend DSHA enhance its policies and procedures for preparing and approving required reports prior to submission.
Department of Housing and Urban Development
Reference Number: 2023-010
Program: 14.881 Moving to Work Demonstration Program
Federal Award Number: None assigned
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Special Tests and Provisions
Condition: In a statistical sample of 40 housing units, documentation evidencing the performance of required periodic inspections to determine compliance with Housing Quality Standards was not available for seven units. The sample of 40 housing units was from five public housing sites. The seven units without the required periodic inspections were located at two of those five public housing sites. DSHA has not implemented controls to monitor the performance of the required periodic inspections. Criteria: 24 CFR § 982.405 - PHA initial and periodic unit inspection requires DSHA to inspect units biannually: (a) The PHA must inspect the unit leased to a family prior to the initial term of the lease, at least biennially during assisted occupancy, and at other times as needed, to determine if the unit meets the HQS (Housing Quality Standards). Questioned Costs: None Effect: Housing Quality Standard compliance was not documented by DSHA. Cause: Inspections performed at two public housing sites were not documented in accordance with DSHA policy. DSHA has not implemented controls to monitor the performance of the required periodic inspections. Recommendation: We recommend DSHA implement controls to monitor and verity required periodic inspections are performed timely.
United States Department of the Treasury
Reference Number: 2023-004
Program: 21.023 COVID-19 Emergency Rental Assistance
Federal Award Number: ERA-2101123208 and ERAE0280
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Eligibility
Condition: Audit testing of a statistical sample of 40 cases processed during the year ended June 30, 2023, revealed the following: Two cases where the applicant received assistance in excess of the allowable maximum assistance, resulting in overpayments totaling $7,090. Four cases (including the two referenced previously) where ERA 1 was charged more than the allowable maximum assistance. The overpayments resulted from errors in applying statutorily established limits for rental assistance. These overpayments were subsequently moved to ERA 2 as described in the Context section. A similar finding was noted during the audit of the year ended June 30, 2022. Refer to Finding 2022-006. Context: During the year ended June 30, 2023, DSHA approved and disbursed assistance for 12,948 cases totaling $49,154,163. During the year ended June 30, 2023, DSHA undertook extensive analysis of ERA assistance payments. DSHA determined the following: Assistance in excess of 15 months totaling approximately $948,000 was charged to ERA 1. The related cases were disclosed to the United States Department of the Treasury and the assistance was reclassified to ERA 2. Certain assistance in excess of 18 months totaling approximately $1,070,000 was paid. This amount was not reported as an allowable cost nor was it reported on the June 30, 2023 Schedule of Expenditures of Federal Awards. The related cases were disclosed to the United States Department of the Treasury. Criteria: The following summarizes the applicable portions of the ERA program requirements: United States Department of the Treasury Program FAQs updated July 6, 2022: ERA1 allows an eligible household to receive up to 12 months of assistance (plus an additional three (3) months, if necessary, to ensure housing stability for the household, subject to the availability of funds). ERA2 allows an eligible household to receive up to 15 months of assistance (plus an additional three (3) months, if necessary, to ensure housing stability for the household, subject to the availability of funds). Grantees must establish policies and procedures to govern the implementation of their ERA programs consistent with the statutes and the ERA program requirements. Questioned Costs: $7,090 of assistance overpayments. Effect: Federal program expenditures of rental assistance were overpaid. Cause: Internal controls over compliance were not appropriately designed, implemented, or operated to appropriately address the risk of noncompliance with the federal program requirements. Data migrated from DSHA’s previous program administration software does not correctly display in the current program administration software contributing to payment errors. Recommendation: We recommend DSHA enhance its policies and procedures for processing rental assistance applications to ensure compliance with the federal program’s requirements.
United States Department of the Treasury
Reference Number: 2023-005
Program: 21.023 COVID-19 Emergency Rental Assistance
Federal Award Number: ERA-2101123208 & ERAE0280
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Reporting; Special Tests and Provisions
Condition: The following conditions were found during audit testing of one ERA1 quarterly report and two
ERA2 quarterly reports: 1. DSHA procedures over the reporting did not include the documentation of the preparation and review of quarterly reports selected for testing. 2. The following reports required by the U.S. Treasury were either not submitted timely, or evidence of their submission date was not available: Grant: ERA1, Reporting Quarter: Friday September 30, 2022, Due Date: Wednesday, November 16,2022, Date Submitted: Not Documented. Grant: ERA2, Reporting Quarter: Friday September 30, 2022, Due Date: Friday, December 16,2022, Date Submitted: Not Documented. Grant: ERA2, Reporting Quarter: Friday March 31, 2023, Due Date: Wednesday, May 17,2023, Date Submitted: Wednesday, May 23. 3. Audit testing of a statistical sample of 40 cases processed during the year ended June 30, 2023, revealed that Area Median Income (AMI) percentage was not calculated correctly for two cases. The AMI percentages calculated at the case level are utilized to support required demographic reporting. 4. Supporting documentation was not retained for information on the reports selected for testing. A review of the reports selected for testing revealed the following: a. The demographic information section of the ERA2 report for the quarter ended March 31, 2023, was not completed. b. The ERA2 report for the quarter ended September 30, 2022, reported administrative expenditures as $7,770,634 which was the amount of ERA award funds approved for participant households. Audit procedures determined that administrative expenditures for the quarter ended September 30, 2022, were approximately $123,000. c. The ERA1 and ERA2 reports for the quarter ended September 30, 2022, report the same amounts expended and obligated, except for the input error noted above. A similar finding was noted during the audit of the year ended June 30, 2022. Refer to finding 2022-008. Criteria: United States Department of the Treasury ERA Program Reporting Guidance version 3.2 was issued March 29, 2022, and provides quarterly reporting deadlines as detailed in the condition. 2 CFR § 200.303 requires the implementation of effective internal controls: “Internal controls requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.” Questioned Costs: None Effect: Reports required by the U.S. Treasury were not submitted timely, accurately, and with contemporaneously prepared supporting documentation. Information necessary for the U.S. Treasury to calculate the required reallocations was not accurately reported on the quarterly reports submitted. Cause: Internal controls over reporting were not appropriately designed, implemented, or operated. DSHA’s internal controls did not capture and report amounts obligated for the operation of the ERA program. The report preparation process utilized reports generated from one application processing system, without taking into account payments processed outside of that system. Recommendation: We recommend DSHA enhance its policies and procedures for preparing and approving required reports prior to submission.
United States Department of the Treasury
Reference Number: 2023-006
Program: 21.026 COVID-19 Homeowner Assistance Fund Program
Federal Award Number: HAF0034
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Allowable Cost
Condition: Reconciliation of the HAF client assistance expenditures for the year ended June 30, 2023, revealed approximately $290,000 of federal funds were held by a vendor and were reported as federal expenditures. During the operation of the program, the vendor received refunds that were not timely remitted to DSHA or utilized to fund assistance. Criteria: The Uniform Guidance Cost Principles requires DSHA to offset credits against program expenditures in 2 CFR 200.406(a): Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Questioned Costs: $290,000. The funds held by the vendor were initially recorded as program costs. During the audit of the year ended June 30, 2023, program costs and revenue were reduced by an audit adjusting journal entry for the amount held by DSHA’s vendor. Effect: Unallowed costs were recorded to the Homeowner Assistance Fund Program during the year ended June 30, 2023. Cause: DSHA was notified by the vendor that a credit was available to be applied to fund future assistance. The vendor did not apply the credit without DSHA’s explicit approval. Recommendation: We recommend DSHA review the design and implementation of internal controls to address the identified weaknesses in internal control.
United States Department of the Treasury
Reference Number: 2023-007
Program: 21.026 COVID-19 Homeowner Assistance Fund Program
Federal Award Number: HAF0034
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Cash Management; Program Income
Condition: During audit testing of the HAF program, we found the following instances of non-compliance. HAF funding received in June 2022 totaling $45 million was deposited into a non-interest-bearing demand account. In March 2023, $21 million was moved to an interest-bearing savings account. Fiscal year 2023 interest earnings of $88,777 on the HAF funds held by DSHA were recognized as program income. Interest earnings in excess of $500 were not annually remitted to the Department of Health and Human Services Payment Management System. Criteria: The HAF program operates in accordance with the requirements of 2 CFR 200.305(b) which requires the following: (8) The non-Federal entity must maintain advance payments of Federal awards in interest-bearing accounts… (9) Interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either Automated Clearing House (ACH) network or a Fedwire Funds Service payment. Questioned Costs: $88,777. Interest income on HAF program funds was initially recorded as program income until it was corrected by an adjusting journal entry. During the audit of the year ended June 30, 2023, interest income was reduced by an audit adjusting journal entry. Effect: HAF program funds were held in a non-interest-bearing account during the period of July 2022 through March 2023. Interest income on HAF program was not timely remitted to the Department of Health and Human Services as required by the federal regulations. Cause: DSHA’s internal controls did not identify HAF program compliance requirements in time to prevent the Conditions noted. Recommendation: We recommend DSHA review the design and implementation of internal controls to address the identified weaknesses in internal control.
United States Department of the Treasury
Reference Number: 2023-008
Program: 21.026 COVID-19 Homeowner Assistance Fund Program
Federal Award Number: HAF0034
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Eligibility; Earmarking; Reporting
Condition: Audit testing of a statistical sample of 41 cases processed during the year ended June 30, 2023, revealed the following: Applicant income was calculated incorrectly for five cases sampled. Of these five cases, two applicants received more months of Future Payment Assistance than allowed by DSHA’s policy, resulting in overpayments totaling $9,799. One applicant received $51,341 in assistance, an overpayment of $1,341. Analysis of assistance for the period of July 1, 2022 through November 12, 2022, identified two homeowners that received in excess of $30,000 of mortgage assistance resulting in overpayments of assistance totaling $3,136. Context: The homeowner income verification process supports the following program functions: Determination of allowable homeowner eligibility for assistance. Determination of allowable Future Payment Assistance (starting in November 2022). Required reporting of assistance by income level. Compliance with the HAF Program Earmarking requirements. Criteria: Eligibility Criteria - DSHA submitted a HAF Grantee Plan to U.S. Department of the Treasury on May 31, 2022. DSHA’s HAF Grantee Plan specifies the following process for the determination of homeowner income: Eligibility Criteria - Continued - DSHA intends to accept written attestations from DE-HAF applicants to ascertain eligibility for the programs (100% of AMI or 150% of AMI depending on the program). DSHA does not anticipate allowing the use of geographic area or other criteria not linked directly to the homeowner’s individual determinants. In addition, while eligibility will be determined with a pass/fail income threshold, later in the application review process a more specific income verification process will be required to establish the amount of monthly mortgage obligation that will be affordable to the homeowner. This income verification process will need to rely on substantiated documentation. This process is consistent with United States Department of the Treasury Homeowner Assistance Fund Guidance issued on June 12, 2023. DSHA’s HAF program began to provide Future Payment Assistance on November 13, 2022 as follows: Applicants between 31.01% - 50% HDTI can be eligible for ‘Reinstatement’ plus up to 3 months of mortgage payments. Applicants with ‘No Income’ or a HDTI 50.01% and above can be eligible for ‘Reinstatement’ plus up to 6 months of mortgage payments. **If in addition to the assistance, applicants will be referred to a HUD-approved Housing Counseling Agency to assist with an action plan beyond the assistance. Earmarking Criteria - The United States Department of the Treasury issued Homeowner Assistance Fund Guidance June 12, 2023, requires that at least 60% of amounts made available to each HAF participant to be used for qualified expenses that assist homeowners having incomes equal to or less than 100% of the area median income or equal to or less than 100% of the median income for the United States, whichever is greater. Any amount not made available to homeowners that meet this income-targeting requirement must be prioritized for assistance to socially disadvantaged individuals, with funds remaining after such prioritization being made available for other eligible homeowners. Reporting Criteria - Homeowner Assistance Fund quarterly reporting requires the submission of Application Data disaggregated by Area Median Income. Maximum Allowed Assistance - DSHA’s program design included maximum assistance as follows: Period: July 1, 2022 - November 12, 2022. Assistance Limitations: Mortgage $30,000; Non-Mortgage $10,000; Total $40,000. Period: November 13, 2022 – June 30,2023. Assistance Limitations: Mortgage N/A; Non-Mortgage N/A; Total $50,000. Questioned Costs: $14,276 of overpayments. Effect: Federal program expenditures for assistance were overpaid. Applicant income determined by assistance calculation process was used for compliance with earmarking requirements and to support required reporting by applicant income level resulting in potential errors in reports submitted to the U.S. Treasury. Cause: Homeowner assistance application processing did not correctly determine verified homeowner income. Recommendation: We recommend DSHA enhance its policies and procedures for processing HAF assistance applications to ensure accurate calculation of verified homeowner income.
United States Department of the Treasury
Reference Number: 2023-009
Program: 21.026 COVID-19 Homeowner Assistance Fund Program
Federal Award Number: HAF0034
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Reporting
Condition: Testing of DSHA’s December 31, 2022 and June 30, 2023 HAF quarterly reports revealed the reports submitted by DSHA reported the same amounts as expended and obligated, for Administrative Expenses and Services, and Counseling & Education. During the year ended June 30, 2023, DSHA entered various contracts for the operation of the program. DSHA’s Annual Reporting did not include data on Socially Disadvantaged Individuals assisted and Area Median Income of households assisted as required by the Program reporting requirements. DSHA did not maintain contemporaneously prepared supporting documentation for the December 31, 2022 and June 30, 2023 quarterly reports or the June 30, 2023 annual report. Criteria: The United States Department of the Treasury Homeowner Assistance Fund Guidance on Participant Compliance and Reporting Responsibilities revised on July 15, 2022, includes the following definitions: Expenditure/Expended means any HAF assistance that has been spent by a HAF participant and/or Subrecipient. Please note, cumulative Expenditures cannot exceed cumulative Obligations. Obligation/Obligated means an order placed for property and services, contracts and subawards made, and similar transactions that require payment (see 2 CFR § 200.1.). Obligated funds include funds that have been Expended. Examples of obligated funds include: HAF funds that have been committed, pledged, or otherwise promised, in writing, to a specific individual or entity as part of a HAF program; HAF funds that have been set aside to cover obligations arising from loan guarantees; HAF funds that have been committed, pledged, or otherwise promised, in writing, as part of a transaction; and HAF funds that have been committed, pledged, or promised, in writing, for allowable administrative expenses (e.g., an executed contract for services). The Homeowner Assistance Fund: Annual Report User Guide Issued October 14, 2022 (Updated October 13, 2023), requires the reporting of outcomes for assistance provided to Homeowners by Area Median Income and Socially Disadvantaged Individuals. Questioned Costs: None Effect: Reports required by the U.S. Treasury were not supported by contemporaneously prepared supporting documentation. Reports submitted to the U.S. Treasury did not include accurate reporting of program obligations. Cause: The report preparation process did not consider executed contracts and agreements to be obligations. Recommendation: We recommend DSHA enhance its policies and procedures for preparing and approving required reports prior to submission.
Department of Housing and Urban Development
Reference Number: 2023-010
Program: 14.881 Moving to Work Demonstration Program
Federal Award Number: None assigned
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Special Tests and Provisions
Condition: In a statistical sample of 40 housing units, documentation evidencing the performance of required periodic inspections to determine compliance with Housing Quality Standards was not available for seven units. The sample of 40 housing units was from five public housing sites. The seven units without the required periodic inspections were located at two of those five public housing sites. DSHA has not implemented controls to monitor the performance of the required periodic inspections. Criteria: 24 CFR § 982.405 - PHA initial and periodic unit inspection requires DSHA to inspect units biannually: (a) The PHA must inspect the unit leased to a family prior to the initial term of the lease, at least biennially during assisted occupancy, and at other times as needed, to determine if the unit meets the HQS (Housing Quality Standards). Questioned Costs: None Effect: Housing Quality Standard compliance was not documented by DSHA. Cause: Inspections performed at two public housing sites were not documented in accordance with DSHA policy. DSHA has not implemented controls to monitor the performance of the required periodic inspections. Recommendation: We recommend DSHA implement controls to monitor and verity required periodic inspections are performed timely.