Audit 327808

FY End
2020-12-31
Total Expended
$5.67M
Findings
4
Programs
4
Year: 2020 Accepted: 2024-11-08
Auditor: Moss Adams LLP

Organization Exclusion Status:

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Findings

ID Ref Severity Repeat Requirement
505140 2020-003 Significant Deficiency - A
505141 2020-004 Significant Deficiency - E
1081582 2020-003 Significant Deficiency - A
1081583 2020-004 Significant Deficiency - E

Programs

ALN Program Spent Major Findings
14.239 Home Investment Partnerships Program $5.03M Yes 2
11.307 Economic Adjustment Assistance $560,072 - 0
14.225 Community Development Block Grants/special Purpose Grants/insular Areas $62,800 - 0
93.569 Community Services Block Grant $20,664 - 0

Contacts

Name Title Type
MMPZQ2W8E4C6 Jacqueline Laumoli Auditee
6846334031 Kory Hoggan Auditor
No contacts on file

Notes to SEFA

Title: Note 1 – Basis of Presentation Accounting Policies: The schedule of expenditures of federal awards (the Schedule) is presented using the accrual basis of accounting, which is described in Note 1 to the basic financial statements of Development Bank of American Samoa (DBAS). Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) wherein certain types of expenses are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where applicable. De Minimis Rate Used: N Rate Explanation: DBAS has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The schedule of expenditures of federal awards (the Schedule) is presented using the accrual basis of accounting, which is described in Note 1 to the basic financial statements of Development Bank of American Samoa (DBAS). Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) wherein certain types of expenses are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where applicable.
Title: Note 2 – Indirect Cost Rate Accounting Policies: The schedule of expenditures of federal awards (the Schedule) is presented using the accrual basis of accounting, which is described in Note 1 to the basic financial statements of Development Bank of American Samoa (DBAS). Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) wherein certain types of expenses are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where applicable. De Minimis Rate Used: N Rate Explanation: DBAS has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. DBAS has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
Title: Note 3 – Loan Programs Accounting Policies: The schedule of expenditures of federal awards (the Schedule) is presented using the accrual basis of accounting, which is described in Note 1 to the basic financial statements of Development Bank of American Samoa (DBAS). Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) wherein certain types of expenses are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where applicable. De Minimis Rate Used: N Rate Explanation: DBAS has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. DBAS, on behalf of the American Samoa Government, has been designated the responsibility of implementing and carrying out the objective of the HOME Investment Partnerships Program. The purpose of this program is to provide no-cost or low-cost financing assistance to low-income families. Under DBAS’s policies and procedures, loan applicants under the HOME Investment Partnerships Program that have been determined to be eligible for financial assistance are required to comply with the terms of the homeowner rehabilitation assistance including the DBAS affordability period and principal residency requirements. As of December 31, 2020, outstanding HOME Investment Partnerships Program loans with continuing compliance requirements totaled $4,287,403.
Title: Note 3 – Loan Programs (continued) Accounting Policies: The schedule of expenditures of federal awards (the Schedule) is presented using the accrual basis of accounting, which is described in Note 1 to the basic financial statements of Development Bank of American Samoa (DBAS). Such expenditures are recognized following the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) wherein certain types of expenses are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where applicable. De Minimis Rate Used: N Rate Explanation: DBAS has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. DBAS is the subrecipient of grants for Revolving Loan Funds (RLFs) under Federal Assistance Listing Number (ALN) Program 11.307 Economic Adjustment Assistance (EDA). For purposes of the Schedule of Expenditures of Federal Awards, the calculation of total expenditures as required in the OMB Compliance Supplement is as follows: Balance of RLF loans outstanding as of December 31, 2020 $ 951,345 Plus cash balances in the RLF as of December 31, 2020 691,824 Plus administrative expenses paid out of RLF income during 2020 54,020 Total RLF $ 1,697,189 Federal share of $600,000 1999 EDA RLF Grant $ 300,000 Federal share of $650,000 1995 EDA RLF Grant 300,000 Total federal share of EDA RLF Grants 600,000 Divided by total EDA RFL Grants Contributions 1,817,937 Total Share of RLF rate 33.00% Total Assistance Listing Number 11.307 EDA RLF Expenditures $ 560,072 There are no continuing compliance requirements from grantor agencies related to the Community Development Block Grants/Special Purpose Grants/Insular Area (ALN # 14.225) and the Community Services Block Grant (ALN # 93.569) loan portfolios. Federal award expenditures include loan disbursements of $984,742. As of December 31, 2020, loan disbursements for the HOME Investment Partnerships Program amounted to $646,225 and consisted of $44,375 and $601,850 from grant drawdowns and program income, respectively.

Finding Details

2020-003 General Disbursements (Significant Deficiency; Other Noncompliance) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: HOME Investment Partnerships Program Assistance Listing Number: 14.239 Condition: During our testing of a sample of three cash disbursements, management was unable to provide evidence for two of the transactions that the grant expenditure was approved by a knowledgeable reviewer. Criteria: In accordance with Uniform Guidance Part 200.405, a cost is allocable to a particular federal award or other cost objective if the goods or services involved are chargeable or assignable to the federal award or cost objective in accordance with relative benefits received. Context: Using the complete population of 30 administrative cost disbursements charged to the HOME Investment Partnerships Program, we tested a sample of 3 disbursements to test that expenditures were approved by someone knowledgeable of the grant terms and conditions. Effect: Of the three transactions randomly selected, management was unable to provide evidence that the grant expenditure was reviewed by someone knowledgeable of the grant for two transactions. Questioned costs: NoneCause: Management did not have adequate controls in place to verify the validity of the amounts charged to the federal award. Recommendation: Internal controls should be strengthened to document approval of grant expenditures by an individual who is knowledgeable of the grant terms and conditions before it is charged to the Program. Management Response: DBAS will establish a set procedure to follow both Finance Department and Loans Department and ensure approval procedures are followed through before loan disbursements are issued. Responsible Persons: Faaeteete Sio and Venetta Holi
2020-004 Segregation of Duties (Significant Deficiency; Other Noncompliance) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: HOME Investment Partnerships Program Assistance Listing Number: 14.239 Condition: During our testing of new loans charged to the HOME Investment Partnerships Program, we tested a sample of 4 loans out of the population of 22 new loans granted during 2020. For one loan out of our sample we identified that the same two people who approved the loan also signed the distribution check. Criteria: In accordance with Uniform Guidance Part 200.303, DBAS must 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Context: Using the complete population of 22 new loans in 2020 charged to the HOME Investment Partnerships Program, we tested a sample of 4 loans. Effect: Proper segregation of duties was not followed presenting elevated risks of unauthorized or inaccurate issuance of loan proceeds. Questioned costs: None Cause: Management did not have adequate internal controls in place for proper segregation of duties.
2020-003 General Disbursements (Significant Deficiency; Other Noncompliance) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: HOME Investment Partnerships Program Assistance Listing Number: 14.239 Condition: During our testing of a sample of three cash disbursements, management was unable to provide evidence for two of the transactions that the grant expenditure was approved by a knowledgeable reviewer. Criteria: In accordance with Uniform Guidance Part 200.405, a cost is allocable to a particular federal award or other cost objective if the goods or services involved are chargeable or assignable to the federal award or cost objective in accordance with relative benefits received. Context: Using the complete population of 30 administrative cost disbursements charged to the HOME Investment Partnerships Program, we tested a sample of 3 disbursements to test that expenditures were approved by someone knowledgeable of the grant terms and conditions. Effect: Of the three transactions randomly selected, management was unable to provide evidence that the grant expenditure was reviewed by someone knowledgeable of the grant for two transactions. Questioned costs: NoneCause: Management did not have adequate controls in place to verify the validity of the amounts charged to the federal award. Recommendation: Internal controls should be strengthened to document approval of grant expenditures by an individual who is knowledgeable of the grant terms and conditions before it is charged to the Program. Management Response: DBAS will establish a set procedure to follow both Finance Department and Loans Department and ensure approval procedures are followed through before loan disbursements are issued. Responsible Persons: Faaeteete Sio and Venetta Holi
2020-004 Segregation of Duties (Significant Deficiency; Other Noncompliance) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: HOME Investment Partnerships Program Assistance Listing Number: 14.239 Condition: During our testing of new loans charged to the HOME Investment Partnerships Program, we tested a sample of 4 loans out of the population of 22 new loans granted during 2020. For one loan out of our sample we identified that the same two people who approved the loan also signed the distribution check. Criteria: In accordance with Uniform Guidance Part 200.303, DBAS must 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Context: Using the complete population of 22 new loans in 2020 charged to the HOME Investment Partnerships Program, we tested a sample of 4 loans. Effect: Proper segregation of duties was not followed presenting elevated risks of unauthorized or inaccurate issuance of loan proceeds. Questioned costs: None Cause: Management did not have adequate internal controls in place for proper segregation of duties.