Audit 356711

2023-003 Internal Controls System Over Allowable Costs and Allowed Activities. – U.S. Department of Housing and Urban Development, Housing Opportunities for Persons with AIDS, Assistance Listing Number 14.241, Passed Through the City of Las Vegas, Nevada. Criteria: As defined in 2 CFR 200.303, auditee is required to maintain a system of internal control over compliance designed to provide reasonable assurance that federal award transactions executed are in compliance with the terms and conditions of the federal award. Funds utilized under the Housing Opportunities for Persons with AIDS program are required to be expended on costs consistent with those outlined in 2 CRF 200 Subpart E – Cost Principles, and within the core service categories outlined in the grant agreement. Condition: Of the fourteen request for reimbursement (RFR) forms prepared and submitted to the grantor in order to receive reimbursement for expenditures during the year, seven were not reviewed and signed by the Executive Director. AFAN has designed a control such that a review of each RFR is performed to ensure expenditures are for allowable costs and allowable activities allowed for under the grant. However, this control was not performed consistently. Cause: The internal control system over the assessment of allowable costs and allowed activities was not operating effectively. A review of requests for reimbursement was either not performed or documentation was not maintained to support a review of requests for reimbursement. Context: Management failed to consistently perform an internal control to address the risk of improper expenses being submitted for reimbursement by the Organization’s grant. Effect: Not performing a review over the documents and allocations supporting requests for reimbursement for the grant increases the risk that unallowable costs and unallowable activities could be submitted for reimbursement which could result in noncompliance of the terms of the federal grant agreement. Repeat Finding: No Recommendation: We recommend management design and implement a system of internal controls whereby a review of costs and activities and the related supporting schedules being submitted for reimbursement are reviewed on a consistent basis and management ensures proper documentation of this review is maintained to support the performance of the control. Views of Responsible Officials and Planned Corrective Actions: Management will implement a control whereby the Executive Director will review and sign all requests for reimbursement prepared by the Finance Manager for submission. The Executive Director will ensure all backup is included and that all direct costs are approved and allowable prior to submission. Payroll related reimbursements will be reviewed to ensure the individuals included and allocation amongst grants are appropriate and the allocations agree to the final payroll records.

2023-004 Internal Control Over Eligibility and Compliance Over Eligibility - U.S. Department of Housing and Urban Development, Housing Opportunities for Persons with AIDS, Assistance Listing Number 14.241, Passed Through the City of Las Vegas, Nevada. Criteria: As defined in 2 CFR 200.303, auditee is required to maintain a system of internal control over compliance designed to provide reasonable assurance that federal award transactions executed are in compliance with the terms and conditions of the federal award. For services to be provided under the Housing Opportunities for Persons with AIDS, individuals requesting services must meet criteria under the grant which includes providing identification and validating proof of HIV/AIDS diagnosis, income, rent or mortgage payment, and need for assistance. A full validation of these criteria is required to be performed for any individual receiving assistance. Condition: Of the twenty-one files selected for individuals who received assistance under the grant, one selection included two copies of the same support for the client’s need for assistance that contained differing amounts for that client’s earnings during the same period which could be indictive of fraud in the application process. No documentation was included in the client file addressing the inconsistency and related risk of fraud for the earnings. Cause: AFAN had designed controls such that each client file would be reviewed by the lead case manager for proper support of eligibility requirements. However, this internal control system did not detect the duplicative eligibility support that could have been indicative of fraud in the application process. Context: Management failed to consistently and effectively perform an internal control to address the risk of ineligible individuals receiving financial assistance. Effect: Failure to properly and consistently perform controls over the review of the client files could result in providing assistance to individuals who are not eligible. The allowance of individuals to receive or continue receiving services without ensuring they meet the eligibility criteria could be a violation of the terms of the federal grant agreement. Repeat Finding: No Recommendation: We recommend management design and implement a system of internal controls whereby a review of client files to ensure eligibility is properly supported is performed before any grant funds are disbursed and that management ensures proper documentation of this review is maintained to support the performance of the control. Views of Responsible Officials and Planned Corrective Actions: Management intends to put in place additional training for case managers to identify eligibility of clients and ensure proper backup is submitted. Supervisors will ensure all backup is included in the case file before being submitted.

2023-003 Internal Controls System Over Allowable Costs and Allowed Activities. – U.S. Department of Housing and Urban Development, Housing Opportunities for Persons with AIDS, Assistance Listing Number 14.241, Passed Through the City of Las Vegas, Nevada. Criteria: As defined in 2 CFR 200.303, auditee is required to maintain a system of internal control over compliance designed to provide reasonable assurance that federal award transactions executed are in compliance with the terms and conditions of the federal award. Funds utilized under the Housing Opportunities for Persons with AIDS program are required to be expended on costs consistent with those outlined in 2 CRF 200 Subpart E – Cost Principles, and within the core service categories outlined in the grant agreement. Condition: Of the fourteen request for reimbursement (RFR) forms prepared and submitted to the grantor in order to receive reimbursement for expenditures during the year, seven were not reviewed and signed by the Executive Director. AFAN has designed a control such that a review of each RFR is performed to ensure expenditures are for allowable costs and allowable activities allowed for under the grant. However, this control was not performed consistently. Cause: The internal control system over the assessment of allowable costs and allowed activities was not operating effectively. A review of requests for reimbursement was either not performed or documentation was not maintained to support a review of requests for reimbursement. Context: Management failed to consistently perform an internal control to address the risk of improper expenses being submitted for reimbursement by the Organization’s grant. Effect: Not performing a review over the documents and allocations supporting requests for reimbursement for the grant increases the risk that unallowable costs and unallowable activities could be submitted for reimbursement which could result in noncompliance of the terms of the federal grant agreement. Repeat Finding: No Recommendation: We recommend management design and implement a system of internal controls whereby a review of costs and activities and the related supporting schedules being submitted for reimbursement are reviewed on a consistent basis and management ensures proper documentation of this review is maintained to support the performance of the control. Views of Responsible Officials and Planned Corrective Actions: Management will implement a control whereby the Executive Director will review and sign all requests for reimbursement prepared by the Finance Manager for submission. The Executive Director will ensure all backup is included and that all direct costs are approved and allowable prior to submission. Payroll related reimbursements will be reviewed to ensure the individuals included and allocation amongst grants are appropriate and the allocations agree to the final payroll records.

2023-004 Internal Control Over Eligibility and Compliance Over Eligibility - U.S. Department of Housing and Urban Development, Housing Opportunities for Persons with AIDS, Assistance Listing Number 14.241, Passed Through the City of Las Vegas, Nevada. Criteria: As defined in 2 CFR 200.303, auditee is required to maintain a system of internal control over compliance designed to provide reasonable assurance that federal award transactions executed are in compliance with the terms and conditions of the federal award. For services to be provided under the Housing Opportunities for Persons with AIDS, individuals requesting services must meet criteria under the grant which includes providing identification and validating proof of HIV/AIDS diagnosis, income, rent or mortgage payment, and need for assistance. A full validation of these criteria is required to be performed for any individual receiving assistance. Condition: Of the twenty-one files selected for individuals who received assistance under the grant, one selection included two copies of the same support for the client’s need for assistance that contained differing amounts for that client’s earnings during the same period which could be indictive of fraud in the application process. No documentation was included in the client file addressing the inconsistency and related risk of fraud for the earnings. Cause: AFAN had designed controls such that each client file would be reviewed by the lead case manager for proper support of eligibility requirements. However, this internal control system did not detect the duplicative eligibility support that could have been indicative of fraud in the application process. Context: Management failed to consistently and effectively perform an internal control to address the risk of ineligible individuals receiving financial assistance. Effect: Failure to properly and consistently perform controls over the review of the client files could result in providing assistance to individuals who are not eligible. The allowance of individuals to receive or continue receiving services without ensuring they meet the eligibility criteria could be a violation of the terms of the federal grant agreement. Repeat Finding: No Recommendation: We recommend management design and implement a system of internal controls whereby a review of client files to ensure eligibility is properly supported is performed before any grant funds are disbursed and that management ensures proper documentation of this review is maintained to support the performance of the control. Views of Responsible Officials and Planned Corrective Actions: Management intends to put in place additional training for case managers to identify eligibility of clients and ensure proper backup is submitted. Supervisors will ensure all backup is included in the case file before being submitted.