Audit 304691

Section III - Federal Award Findings and Questioned Costs Finding 2023-001: Significant Deficiency in Internal Control Federal Program: Section 202 Project Rental Assistance Contract Assistance Listing Number: 14.157 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: N/A Award Number: 033-EH303 Award Year: 2023 Compliance Requirement: Eligibility Questioned Costs: Not Determinable Criteria: HUD regulations require the eligibility of each resident to be reassessed and rent to be recalculated on an annual basis. At each reassessment date, necessary financial information including income, assets, and medical expense must be updated and confirmed in order to accurate calculate the resident's portion of rental payment for the next twelve months. Condition and Context: The Corporation, largely due to employee turnover and leaves of absence, lacked proper segregation of duties with respect to these calculations. Proper segregation of duties is necessary to prevent a situation where one individual handles a transaction from beginning to end in order to reduce the potential for noncompliance due to error or fraud. During the audit of the eligibility requirements, one resident file out of six resident files tested contained an error in the medical expenses, which were input incorrectly into the calculation from the source documents in error. Using the correct medical expense amounts would result in an additional $264 of annual medical expenses for the resident. Cause: The lack of segregation of duties is due to turnover and leaves of absence at the project manager position. Resulting in calculations being completed without a separate review process. Effect or Potential Effect: As a result of the lack of proper segregation of duties, noncompliance due to error or fraud could occur without being detected and corrected, timely. Recommendation: Management should implement a review process for these calculations. Management's Response: The Corporation will implement a standard review process over these calculations to prevent and detect errors on a timely basis.

Section III - Federal Award Findings and Questioned Costs Finding 2023-001: Significant Deficiency in Internal Control Federal Program: Section 202 Project Rental Assistance Contract Assistance Listing Number: 14.157 Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Agency: N/A Award Number: 033-EH303 Award Year: 2023 Compliance Requirement: Eligibility Questioned Costs: Not Determinable Criteria: HUD regulations require the eligibility of each resident to be reassessed and rent to be recalculated on an annual basis. At each reassessment date, necessary financial information including income, assets, and medical expense must be updated and confirmed in order to accurate calculate the resident's portion of rental payment for the next twelve months. Condition and Context: The Corporation, largely due to employee turnover and leaves of absence, lacked proper segregation of duties with respect to these calculations. Proper segregation of duties is necessary to prevent a situation where one individual handles a transaction from beginning to end in order to reduce the potential for noncompliance due to error or fraud. During the audit of the eligibility requirements, one resident file out of six resident files tested contained an error in the medical expenses, which were input incorrectly into the calculation from the source documents in error. Using the correct medical expense amounts would result in an additional $264 of annual medical expenses for the resident. Cause: The lack of segregation of duties is due to turnover and leaves of absence at the project manager position. Resulting in calculations being completed without a separate review process. Effect or Potential Effect: As a result of the lack of proper segregation of duties, noncompliance due to error or fraud could occur without being detected and corrected, timely. Recommendation: Management should implement a review process for these calculations. Management's Response: The Corporation will implement a standard review process over these calculations to prevent and detect errors on a timely basis.