FAC Explorer

Audit 303346

FY End
2023-06-30
Total Expended
$800,602
Findings
12
Programs
2
Organization: Interfaith Works, Inc. (MD)
Year: 2023 Accepted: 2024-04-12
Auditor: Gelman Rosenberg & Freedman

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
393054 2023-002 Material Weakness - I
393055 2023-003 Significant Deficiency - N
393056 2023-004 Significant Deficiency - L
393057 2023-002 Material Weakness - I
393058 2023-003 Significant Deficiency - N
393059 2023-004 Significant Deficiency - L
969496 2023-002 Material Weakness - I
969497 2023-003 Significant Deficiency - N
969498 2023-004 Significant Deficiency - L
969499 2023-002 Material Weakness - I
969500 2023-003 Significant Deficiency - N
969501 2023-004 Significant Deficiency - L

Programs

ALN Program Spent Major Findings
14.267 Continuum of Care Program $168,825 Yes 3
93.958 Block Grants for Community Mental Health Services $10,130 - 0

Contacts

Name Title Type
E9S5HBLG2BG6 Courtney Hall Auditee
3017628682 Susan Colladay Auditor
No contacts on file

Notes to SEFA

Title: Note 1. Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. De Minimis Rate Used: N Rate Explanation: Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. IW has elected not to use the 10-percent de minimis indirect cost rate as allowed under Uniform Guidance. For the awards from the U.S. Department of Housing and Urban Debelopment, IW used indirect rates that approximated 9.9% as allowed by the approved budgets related to each grant awarded under ALN 14.267. For the awards from the U.S. Department of Health and Human Services, IW used an indirect rate of 7.5% and a fringe rate of 15.92% during the year ended June 30, 2023. The indirect and fringe rates were approved by the United States Department of Health and Human Services on June 17, 2022. The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the Federal award activity of Interfaith Works, Inc. (IW) under programs of the Federal Government for the year ended June 30, 2023. Information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The Schedule presents only a selected portion of the operations of IW and, accordingly, it is not intended to and does not present the financial position, changes in net assets or cash flows of IW.
Title: Note 2. Summary of Significant Accounting Policies Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. De Minimis Rate Used: N Rate Explanation: Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. IW has elected not to use the 10-percent de minimis indirect cost rate as allowed under Uniform Guidance. For the awards from the U.S. Department of Housing and Urban Debelopment, IW used indirect rates that approximated 9.9% as allowed by the approved budgets related to each grant awarded under ALN 14.267. For the awards from the U.S. Department of Health and Human Services, IW used an indirect rate of 7.5% and a fringe rate of 15.92% during the year ended June 30, 2023. The indirect and fringe rates were approved by the United States Department of Health and Human Services on June 17, 2022. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. IW has elected not to use the 10-percent de minimis indirect cost rate as allowed under Uniform Guidance. For the awards from the U.S. Department of Housing and Urban Debelopment, IW used indirect rates that approximated 9.9% as allowed by the approved budgets related to each grant awarded under ALN 14.267. For the awards from the U.S. Department of Health and Human Services, IW used an indirect rate of 7.5% and a fringe rate of 15.92% during the year ended June 30, 2023. The indirect and fringe rates were approved by the United States Department of Health and Human Services on June 17, 2022.
Title: Note 3. Reconciliation of Schedule of Expenditures of Federal Awards to Financial Statements Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. De Minimis Rate Used: N Rate Explanation: Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. IW has elected not to use the 10-percent de minimis indirect cost rate as allowed under Uniform Guidance. For the awards from the U.S. Department of Housing and Urban Debelopment, IW used indirect rates that approximated 9.9% as allowed by the approved budgets related to each grant awarded under ALN 14.267. For the awards from the U.S. Department of Health and Human Services, IW used an indirect rate of 7.5% and a fringe rate of 15.92% during the year ended June 30, 2023. The indirect and fringe rates were approved by the United States Department of Health and Human Services on June 17, 2022. Support from federal, state, and county grants as reported on the accompanying Statement of Activities and Changes in Net Assets totaled $9,598,251 for the year ended June 30, 2023. Since this amount does not agree to the Schedule, following is a reconciliation of the Schedule to the total support from federal, state, and county grants for the year ended June 30, 2023: Federal expenditures reported on the Schedule $ 800,602 Non-federal expenditures (state and county grants) 8,797,649 TOTAL $ 9,598,251

Finding Details

Finding 2023-002
Finding 2023-002: Procurement, Suspension, and Debarment (Material Weakness) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: IW has a formal written procurement policy, but it does not conform to the procurement standards identified in §§ 200.317 through 200.327, which is the Uniform Guidance. As a result, no procurement files were maintained to document IW's procurement actions. In addition, for all disbursements tested, IW could not provide documentation of their verification, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. Questioned Costs: None. Cause: IW has not updated its written procurement policy to conform to the Uniform Guidance. In addition, IW did not require that evidence of SAM checks be maintained in its vendor files. As a result, IW did not maintain adequate support to provide evidence that appropriate suspension and debarment searches were performed. Despite the lack of documentation, a search was performed after the fact to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded. Therefore, no questioned costs have been reported related to the sample that was tested. Effect or Potential Effect: Without an updated procurement policy that conforms to the Uniform Guidance and related procurement documentation, there is a risk that IW did not perform a proper evaluation of each potential vendor whose costs were charged to Federal programs. In addition, IW could not readily provide evidence that it had assessed whether or not its vendors were suspended, debarred, or otherwise excluded. As a result, the potential for payments to suspended, debarred, or otherwise excluded vendors and individuals exists. Recommendation: IW should revise its procurement policy so that it conforms to the Uniform Guidance. Furthermore, IW should maintain documentation in its files to provide evidence to support that it followed the procurement policy. In addition, IW should establish internal controls to ensure documentation is maintained to evidence that it performed the required suspension and debarment searches on the SAM website.
Finding 2023-003
Finding 2023-003: Special Tests and Provisions - Reasonable Rental Rates (Significant Deficiency) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: The 2023 Compliance Supplement - 2 CFR Part 200 Appendix XI in relation to ALN 14.267 requires compliance with the reasonable rental rates provision. In particular, where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space (24 CFR section 578.49(b)(1)). Also, where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Grant funds in an amount up to one month’s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants (24 CFR sections 578.49(b)(2) and 578.51(g) and (j)). Condition: For all units tested, IW could not provide documentation of the verification that the rent did not exceed rents currently being charged for comparable units taking in account relevant features. Questioned Costs: None. Cause: IW has a policy and procedure in place to find units that have reasonable rental rates, but no documentation was maintained in the housing program's files that evidences IW is following the Uniform Guidance and the guidelines in the 2023 Compliance Supplement regarding reasonable rental rates. Effect or Potential Effect: Because of the lack of documentation, it was difficult to determine the acceptability of the manner in which IW establishes rent reasonableness and the rents charged by the owner for comparable unassisted units. However, we were able to verify by a review of the lease agreements and publicly available information on rental rates that the contract rents being paid are comparable to (or less than) those paid for unassisted units, no more than one month’s rent is paid for tenant damages, and that the portion of rents paid with grant funds do not exceed fair market rents. Recommendation: IW should establish internal controls to ensure proper documentation is maintained as evidence to support that it performed the required verification of rent reasonableness.
Finding 2023-004
Finding 2023-004: Federal Financial Reporting Requirements (Significant Deficiency) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: Code of Federal Regulations (CFR) Section 200.303(b) requires non-Federal entities to establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity is managing Federal awards in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. CFR Section 200.502(a) states that the determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. CFR Section 200.510 states that the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Condition: The schedule of expenditures of Federal awards (SEFA) for the year ended June 30, 2023, was not supported by general ledger detail at the start of our audit in October 2023. Management had not originally allocated costs in the general ledger such that it supported the amounts on the SEFA. The allocation of costs in the general ledger was completed in January 2024. Questioned Costs: None Cause: IW originally prepared the SEFA without fully allocating all Federal award related costs in the general ledger. Effect or Potential Effect: The exclusion of certain allocated costs from the general ledger created variances when the SEFA was reconciled to the general ledger at the start of the audit in October 2023. Without remedy, this situation could have caused an inaccurate selection of audit samples for single audit testing. Recommendation: IW should implement a process for preparing the SEFA that includes fully allocating costs in the general ledger so as to support all amounts reported in the SEFA.
Finding 2023-002
Finding 2023-002: Procurement, Suspension, and Debarment (Material Weakness) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: IW has a formal written procurement policy, but it does not conform to the procurement standards identified in §§ 200.317 through 200.327, which is the Uniform Guidance. As a result, no procurement files were maintained to document IW's procurement actions. In addition, for all disbursements tested, IW could not provide documentation of their verification, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. Questioned Costs: None. Cause: IW has not updated its written procurement policy to conform to the Uniform Guidance. In addition, IW did not require that evidence of SAM checks be maintained in its vendor files. As a result, IW did not maintain adequate support to provide evidence that appropriate suspension and debarment searches were performed. Despite the lack of documentation, a search was performed after the fact to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded. Therefore, no questioned costs have been reported related to the sample that was tested. Effect or Potential Effect: Without an updated procurement policy that conforms to the Uniform Guidance and related procurement documentation, there is a risk that IW did not perform a proper evaluation of each potential vendor whose costs were charged to Federal programs. In addition, IW could not readily provide evidence that it had assessed whether or not its vendors were suspended, debarred, or otherwise excluded. As a result, the potential for payments to suspended, debarred, or otherwise excluded vendors and individuals exists. Recommendation: IW should revise its procurement policy so that it conforms to the Uniform Guidance. Furthermore, IW should maintain documentation in its files to provide evidence to support that it followed the procurement policy. In addition, IW should establish internal controls to ensure documentation is maintained to evidence that it performed the required suspension and debarment searches on the SAM website.
Finding 2023-003
Finding 2023-003: Special Tests and Provisions - Reasonable Rental Rates (Significant Deficiency) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: The 2023 Compliance Supplement - 2 CFR Part 200 Appendix XI in relation to ALN 14.267 requires compliance with the reasonable rental rates provision. In particular, where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space (24 CFR section 578.49(b)(1)). Also, where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Grant funds in an amount up to one month’s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants (24 CFR sections 578.49(b)(2) and 578.51(g) and (j)). Condition: For all units tested, IW could not provide documentation of the verification that the rent did not exceed rents currently being charged for comparable units taking in account relevant features. Questioned Costs: None. Cause: IW has a policy and procedure in place to find units that have reasonable rental rates, but no documentation was maintained in the housing program's files that evidences IW is following the Uniform Guidance and the guidelines in the 2023 Compliance Supplement regarding reasonable rental rates. Effect or Potential Effect: Because of the lack of documentation, it was difficult to determine the acceptability of the manner in which IW establishes rent reasonableness and the rents charged by the owner for comparable unassisted units. However, we were able to verify by a review of the lease agreements and publicly available information on rental rates that the contract rents being paid are comparable to (or less than) those paid for unassisted units, no more than one month’s rent is paid for tenant damages, and that the portion of rents paid with grant funds do not exceed fair market rents. Recommendation: IW should establish internal controls to ensure proper documentation is maintained as evidence to support that it performed the required verification of rent reasonableness.
Finding 2023-004
Finding 2023-004: Federal Financial Reporting Requirements (Significant Deficiency) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: Code of Federal Regulations (CFR) Section 200.303(b) requires non-Federal entities to establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity is managing Federal awards in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. CFR Section 200.502(a) states that the determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. CFR Section 200.510 states that the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Condition: The schedule of expenditures of Federal awards (SEFA) for the year ended June 30, 2023, was not supported by general ledger detail at the start of our audit in October 2023. Management had not originally allocated costs in the general ledger such that it supported the amounts on the SEFA. The allocation of costs in the general ledger was completed in January 2024. Questioned Costs: None Cause: IW originally prepared the SEFA without fully allocating all Federal award related costs in the general ledger. Effect or Potential Effect: The exclusion of certain allocated costs from the general ledger created variances when the SEFA was reconciled to the general ledger at the start of the audit in October 2023. Without remedy, this situation could have caused an inaccurate selection of audit samples for single audit testing. Recommendation: IW should implement a process for preparing the SEFA that includes fully allocating costs in the general ledger so as to support all amounts reported in the SEFA.
Finding 2023-002
Finding 2023-002: Procurement, Suspension, and Debarment (Material Weakness) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: IW has a formal written procurement policy, but it does not conform to the procurement standards identified in §§ 200.317 through 200.327, which is the Uniform Guidance. As a result, no procurement files were maintained to document IW's procurement actions. In addition, for all disbursements tested, IW could not provide documentation of their verification, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. Questioned Costs: None. Cause: IW has not updated its written procurement policy to conform to the Uniform Guidance. In addition, IW did not require that evidence of SAM checks be maintained in its vendor files. As a result, IW did not maintain adequate support to provide evidence that appropriate suspension and debarment searches were performed. Despite the lack of documentation, a search was performed after the fact to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded. Therefore, no questioned costs have been reported related to the sample that was tested. Effect or Potential Effect: Without an updated procurement policy that conforms to the Uniform Guidance and related procurement documentation, there is a risk that IW did not perform a proper evaluation of each potential vendor whose costs were charged to Federal programs. In addition, IW could not readily provide evidence that it had assessed whether or not its vendors were suspended, debarred, or otherwise excluded. As a result, the potential for payments to suspended, debarred, or otherwise excluded vendors and individuals exists. Recommendation: IW should revise its procurement policy so that it conforms to the Uniform Guidance. Furthermore, IW should maintain documentation in its files to provide evidence to support that it followed the procurement policy. In addition, IW should establish internal controls to ensure documentation is maintained to evidence that it performed the required suspension and debarment searches on the SAM website.
Finding 2023-003
Finding 2023-003: Special Tests and Provisions - Reasonable Rental Rates (Significant Deficiency) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: The 2023 Compliance Supplement - 2 CFR Part 200 Appendix XI in relation to ALN 14.267 requires compliance with the reasonable rental rates provision. In particular, where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space (24 CFR section 578.49(b)(1)). Also, where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Grant funds in an amount up to one month’s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants (24 CFR sections 578.49(b)(2) and 578.51(g) and (j)). Condition: For all units tested, IW could not provide documentation of the verification that the rent did not exceed rents currently being charged for comparable units taking in account relevant features. Questioned Costs: None. Cause: IW has a policy and procedure in place to find units that have reasonable rental rates, but no documentation was maintained in the housing program's files that evidences IW is following the Uniform Guidance and the guidelines in the 2023 Compliance Supplement regarding reasonable rental rates. Effect or Potential Effect: Because of the lack of documentation, it was difficult to determine the acceptability of the manner in which IW establishes rent reasonableness and the rents charged by the owner for comparable unassisted units. However, we were able to verify by a review of the lease agreements and publicly available information on rental rates that the contract rents being paid are comparable to (or less than) those paid for unassisted units, no more than one month’s rent is paid for tenant damages, and that the portion of rents paid with grant funds do not exceed fair market rents. Recommendation: IW should establish internal controls to ensure proper documentation is maintained as evidence to support that it performed the required verification of rent reasonableness.
Finding 2023-004
Finding 2023-004: Federal Financial Reporting Requirements (Significant Deficiency) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: Code of Federal Regulations (CFR) Section 200.303(b) requires non-Federal entities to establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity is managing Federal awards in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. CFR Section 200.502(a) states that the determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. CFR Section 200.510 states that the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Condition: The schedule of expenditures of Federal awards (SEFA) for the year ended June 30, 2023, was not supported by general ledger detail at the start of our audit in October 2023. Management had not originally allocated costs in the general ledger such that it supported the amounts on the SEFA. The allocation of costs in the general ledger was completed in January 2024. Questioned Costs: None Cause: IW originally prepared the SEFA without fully allocating all Federal award related costs in the general ledger. Effect or Potential Effect: The exclusion of certain allocated costs from the general ledger created variances when the SEFA was reconciled to the general ledger at the start of the audit in October 2023. Without remedy, this situation could have caused an inaccurate selection of audit samples for single audit testing. Recommendation: IW should implement a process for preparing the SEFA that includes fully allocating costs in the general ledger so as to support all amounts reported in the SEFA.
Finding 2023-002
Finding 2023-002: Procurement, Suspension, and Debarment (Material Weakness) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: IW has a formal written procurement policy, but it does not conform to the procurement standards identified in §§ 200.317 through 200.327, which is the Uniform Guidance. As a result, no procurement files were maintained to document IW's procurement actions. In addition, for all disbursements tested, IW could not provide documentation of their verification, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. Questioned Costs: None. Cause: IW has not updated its written procurement policy to conform to the Uniform Guidance. In addition, IW did not require that evidence of SAM checks be maintained in its vendor files. As a result, IW did not maintain adequate support to provide evidence that appropriate suspension and debarment searches were performed. Despite the lack of documentation, a search was performed after the fact to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded. Therefore, no questioned costs have been reported related to the sample that was tested. Effect or Potential Effect: Without an updated procurement policy that conforms to the Uniform Guidance and related procurement documentation, there is a risk that IW did not perform a proper evaluation of each potential vendor whose costs were charged to Federal programs. In addition, IW could not readily provide evidence that it had assessed whether or not its vendors were suspended, debarred, or otherwise excluded. As a result, the potential for payments to suspended, debarred, or otherwise excluded vendors and individuals exists. Recommendation: IW should revise its procurement policy so that it conforms to the Uniform Guidance. Furthermore, IW should maintain documentation in its files to provide evidence to support that it followed the procurement policy. In addition, IW should establish internal controls to ensure documentation is maintained to evidence that it performed the required suspension and debarment searches on the SAM website.
Finding 2023-003
Finding 2023-003: Special Tests and Provisions - Reasonable Rental Rates (Significant Deficiency) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: The 2023 Compliance Supplement - 2 CFR Part 200 Appendix XI in relation to ALN 14.267 requires compliance with the reasonable rental rates provision. In particular, where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space (24 CFR section 578.49(b)(1)). Also, where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Grant funds in an amount up to one month’s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants (24 CFR sections 578.49(b)(2) and 578.51(g) and (j)). Condition: For all units tested, IW could not provide documentation of the verification that the rent did not exceed rents currently being charged for comparable units taking in account relevant features. Questioned Costs: None. Cause: IW has a policy and procedure in place to find units that have reasonable rental rates, but no documentation was maintained in the housing program's files that evidences IW is following the Uniform Guidance and the guidelines in the 2023 Compliance Supplement regarding reasonable rental rates. Effect or Potential Effect: Because of the lack of documentation, it was difficult to determine the acceptability of the manner in which IW establishes rent reasonableness and the rents charged by the owner for comparable unassisted units. However, we were able to verify by a review of the lease agreements and publicly available information on rental rates that the contract rents being paid are comparable to (or less than) those paid for unassisted units, no more than one month’s rent is paid for tenant damages, and that the portion of rents paid with grant funds do not exceed fair market rents. Recommendation: IW should establish internal controls to ensure proper documentation is maintained as evidence to support that it performed the required verification of rent reasonableness.
Finding 2023-004
Finding 2023-004: Federal Financial Reporting Requirements (Significant Deficiency) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: Code of Federal Regulations (CFR) Section 200.303(b) requires non-Federal entities to establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity is managing Federal awards in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. CFR Section 200.502(a) states that the determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. CFR Section 200.510 states that the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Condition: The schedule of expenditures of Federal awards (SEFA) for the year ended June 30, 2023, was not supported by general ledger detail at the start of our audit in October 2023. Management had not originally allocated costs in the general ledger such that it supported the amounts on the SEFA. The allocation of costs in the general ledger was completed in January 2024. Questioned Costs: None Cause: IW originally prepared the SEFA without fully allocating all Federal award related costs in the general ledger. Effect or Potential Effect: The exclusion of certain allocated costs from the general ledger created variances when the SEFA was reconciled to the general ledger at the start of the audit in October 2023. Without remedy, this situation could have caused an inaccurate selection of audit samples for single audit testing. Recommendation: IW should implement a process for preparing the SEFA that includes fully allocating costs in the general ledger so as to support all amounts reported in the SEFA.