U.S. Department of Housing and Urban Development #14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants 2024-002 Fixed Assets – Lack of Proper Tracking and Capitalization Criteria: Per 2 CFR §200.313 (Equipment) and §200.302(b)(4), entities must maintain records that accurately describe property purchased with federal funds, including information such as description, serial number, funding source, acquisition cost, and location. Additionally, the organization’s capitalization policy requires assets exceeding the capitalization threshold to be recorded and depreciated over their useful lives rather than expensed when purchased. Condition: During the audit, it was noted that certain fixed assets purchased with government grant funds were expensed rather than capitalized in the Organization’s accounting records. In addition, the Organization does not maintain a complete and up-to-date fixed asset listing identifying assets purchased with grant funds. As a result, assets acquired with federal funds are not being properly tracked or reported in accordance with applicable regulations and Organizational policy. Cause: The Organization’s capitalization procedures were not consistently applied, and controls over review of capital purchases were insufficient. Effect: The lack of accurate tracking and capitalization of grant-funded assets increases the risk of noncompliance with federal property management requirements, inaccurate financial reporting, and difficulty in monitoring and safeguarding assets purchased with government funds. Questioned Costs: None noted. Recommendation: We recommend management review and update procedures to ensure all purchases meeting the capitalization threshold are properly identified and recorded as fixed assets, maintain a detailed fixed asset listing that includes all assets purchased with federal funds, and train accounting staff on capitalization requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this finding. Corrective Action: Fair Haven has internal records with tracking assets but will ensure that all qualifying capital asset purchases are properly capitalized and recorded on the balance sheet in accordance with GAAP and added to the fixed asset register. Management will review significant purchases at acquisitions to confirm proper treatment going forward.
U.S. Department of Housing and Urban Development #14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants 2024-003 Inaccurate Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Criteria: Per 2 CFR §200.510(b), the auditee must prepare a SEFA that includes the total federal awards expended, the name of the federal agency, the Assistance Listing Number, the pass-through entity identifying number (if applicable), and other relevant details to ensure complete and accurate reporting. Condition: During our audit of the federal awards received by the Organization, we noted that the SEFA was not prepared. Cause: The failure to prepare the SEFA was due to a lack of formal procedures and oversight in Single Audit requirements. Effect: Errors in the preparation of the SEFA could lead funding agencies to misinterpret the level of spending for a particular program for the period under audit. Additionally, the identification of major federal award programs chosen for specific compliance testing could be erroneous, depending on the misstatement in the total amount of federal expenditures for the year. Questioned Costs: None noted. Recommendation: We recommend that staff responsible for federal grant reporting receive additional training on Single Audits and SEFA preparation. Views of Responsible Officials and Planned Corrective Actions: Management agrees and has adopted a SEFA tracking template. Corrective Action: Track federal expenditures monthly by funding source and Assistance Listing Number (ALN), reconcile SEFA totals to the general eldger, and train staff on Uniform Guidance.
U.S. Department of Housing and Urban Development #14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants 2024-004 Lack of Documented Approval (Significant Deficiency) Criteria: Per 2 CFR §200.303, the entity must establish and maintain effective internal controls over federal awards that provide reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the award. Adequate documentation of approvals is a fundamental internal control to ensure expenditures are necessary, allowable, and properly authorized. Condition: During our testing of expenditures charged to the Community Project Funding funded by the US Department of Housing and Urban Development, we noted that the Organization did not maintain documented evidence of management approval prior to incurring or paying costs. The transactions reviewed lacked documented authorizations, supervisor sign-offs, or other documentation showing formal approval. Cause: The lack of documented approval appears to be due to inconsistent application of internal controls and the absence of a standardized process for documenting expenditure authorization for federal programs. Effect: Without documented approval, there is an increased risk that unallowable or unauthorized expenditures could be charged to the federal award. It also weakens the audit trail and compliance with Uniform Guidance requirements. Questioned Costs: None noted. Recommendation: We recommend the Organization implement and enforce a formal process requiring documented pre-approval of all expenditures charged to federal programs. This may include standardized approval forms or electronic workflows that clearly demonstrate appropriate review and authorization prior to payment. Views of Responsible Officials and Planned Corrective Actions: Management agrees documentation must demonstrate proper approval. Corrective Action: Utilize standard purchase authorization and maintain approval documentation with supporting invoices/receipts.
U.S. Department of Housing and Urban Development #14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants 2024-005 Lack of Written Allocation Plan for Shared Costs (Significant Deficiency) Criteria: In accordance with 2 CFR §200.405(d), any cost allocated to a federal award must be allocable, reasonable, and based on a method that is supported and consistently applied. In addition, 2 CFR §200.403(g) requires that costs be adequately documented. A written allocation plan is essential to demonstrate that the allocation of shared costs is equitable and in compliance with Uniform Guidance. Condition: The Organization does not have a written cost allocation plan to document the basis for distributing shared costs such as salaries, occupancy, and administrative expenses among its programs and grants. Instead, management relies on grant budgets and staff judgment to determine which costs are charged to each grant. As a result, there is no consistent or documented methodology supporting the allocation of shared costs to benefiting programs. Cause: Management has not developed or implemented a written cost allocation plan. Cost allocations have historically been based on grant budgets or management's understanding of what each grant will support, rather than on a systematic and documented method. Effect: Without a written cost allocation plan, there is an increased risk that costs may not be allocated consistently or accurately among programs and grants. This could result in noncompliance with federal cost principles and potential questioned costs if expenses are not properly supported. Questioned Costs: None noted. Recommendation: We recommend that the Organization develop and implement a written cost allocation plan that outlines the basis for distributing shared costs, including the allocation methodology, the types of costs involved, and the programs affected. The plan should be reviewed periodically and updated as necessary to reflect changes in funding or operations. Supporting documentation for allocations should be maintained and readily available for audit purposes. Views of Responsible Officials and Planned Corrective Actions: Management agrees and recognizes the importance of consistent allocation methodologies. Corrective Action: Increase the Cost Allocation Plan defining allocation bases for shared expenses, supported by documentation and reviewed annually.
U.S. Department of Housing and Urban Development #14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants 2024-006 Lack of Documentation for Suspension and Debarment Verification Criteria: Per 2 CFR §180.300 and 2 CFR §200.214, entities are prohibited from contracting with or making subawards to parties that are suspended or debarred. Entities must verify a vendor's status using SAM.gov and maintain documentation as evidence of compliance with this requirement. Condition: While the Organization has a written procurement policy that references compliance with federal procurement standards, there was no documentation to demonstrate that suspension and debarment verifications were performed for vendors or contractors paid with federal funds during the year. Cause: Although the Organization has a procurement policy in place, the procedures for documenting suspension and debarment verification were not consistently followed or retained. Effect: Without documentation of suspension and debarment checks, there is an increased risk that federal funds could be expended with a vendor or contractor that is ineligible to receive federal awards, resulting in potential noncompliance with federal regulations. Questioned Costs: None noted. Recommendation: We recommend the Organization strengthen implementation of its procurement policy by requiring documentation of suspension and debarment checks be included in all procurement files for federal funded contracts. This may include saving screenshots or printouts of the SAM.gov search results, retaining vendor verification logs, or using automated tools if available. Documentation should be maintained in accordance with federal record retention requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees documentation must be retained. Corrective Action: Management has implemented a formal process to document vendor eligibility verficiation. As of FY 2025, all vendors are revewied in SAM. gov prior to payment or contract execution, and a screenshot or PDF of the verification is saved to the Vendor Verification Log. The Grants & Finance Manager maintains this documentation as part of the procurement file.
U.S. Department of Housing and Urban Development #14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants 2024-007 Untimely Submission of Single Audit Reporting Package to the Federal Audit Clearinghouse Criteria: Per 2 CFR §200.512(a), the auditee must submit the data collection form and reporting package to the Federal Audit Clearinghouse (FAC) within the earlier of 30 calendar days after the receipt of the auditors' report, or nine months after the end of the audit period. Condition: The Organization did not file the required Single Audit reporting package with the FAC within the required timeframe. The reporting package for the fiscal year ended July 31, 2024, was submitted after the nine month deadline of April 30, 2025. Cause: The audit was not completed in a timely manner due to the Organization not knowing it needed a Single Audit and subsequent delays in getting the required documentation for compliance testing. This resulted in a late submission of the Single Audit reporting package to the FAC. Effect: Failure to file the Single Audit timely may result in noncompliance with federal requirements and could affect the entity's eligibility to receive future federal funding. Questioned Costs: None noted. Recommendation: We recommend the Organization implement procedures to ensure timely completion of the audit process, including timely submission of requested documentation to meet reporting deadline. Views of Responsible Officials and Planned Corrective Actions: Management agrees timeliness is critical. Corrective Action: Maintain an audit compliance calendar with key federal deadlines and internal milestone tracking.