Finding 2024-008: Special Tests and Provisions (Material Weakness) Federal Program: Continuum of Care Program Assistance Listing Number: 14.267 Criteria: Per 2 CFR Part 200 and HUD program requirements (Compliance Supplement, Special Tests and Provisions), when grant funds are used to pay rent for all or part of a structure or individual housing units, 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 units. Documentation supporting these determinations must be maintained. Condition /Context: For 60 rental transactions tested, there was a lack of documentation demonstrating that rents charged under the Continuum of Care Program did not exceed rents charged by the same owner for comparable unassisted units. Our sample was not, and was not intended to be, statistically valid. Cause: Management did not implement procedures to obtain or retain documentation verifying that rents charged were consistent with those for comparable unassisted units owned by the same landlord. Staff were unaware of the specific documentation requirement, and supervisory review did not identify the omission. Effect or potential effect: Without documentation, compliance with HUD requirements regarding reasonable rental rates cannot be substantiated. This increases the risk that federal funds may be used for rents that exceed allowable limits. Questioned Costs: None Repeat Finding, if applicable: This was not a repeat finding. Recommendation: Management should establish and enforce procedures requiring documentation that rents paid under the program do not exceed rents charged by the same owner for comparable unassisted units. Acceptable documentation may include copies of leases for unassisted units, rent comparison worksheets, or other contemporaneous evidence. Staff should be trained on this requirement, and supervisory review should confirm compliance before approving rental payments. Views of Responsible Officials: Camillus House acknowledges the finding and concurs with the auditor’s assessment. Management recognizes the importance of maintaining documentation to substantiate that rents charged under the Continuum of Care Program are reasonable and comply with HUD and federal requirements. Management has implemented corrective measures to strengthen internal controls and compliance procedures for rental payments.
Finding 2024-006: Activities Allowed or Unallowed / Allowable Costs / Cost Principles (Payroll) (Material Weakness & Material Noncompliance) Federal Program: Coronavirus State and Local Fiscal Recovery Funds ("SLFRF") Assistance Listing Number: 21.027 Criteria: Per Uniform Guidance (§200.430), compensation costs charged to federal awards must be based on records that accurately reflect the work performed, be supported by a system of internal control providing reasonable assurance that charges are accurate, allowable, and properly allocated, reflect actual time worked, not budget estimates, and must include documentation such as timesheets or certifications of time and effort. Condition/Context: For a sample of 60 payroll transactions tested for the SLFRF program, totaling $28,505, Camillus did not maintain approved timesheets or any allocation methodology to support payroll costs charged to the program. Allocations were based solely on budget estimates rather than actual time and effort records, which does not comply with Uniform Guidance requirements. Our sample was not, and was not intended to be, statistically valid. Cause: Camillus has not developed a system of internal control which provides information that personnel charges are accurate, allowable, and properly allocated. Effect or potential effect: Payroll costs charged to the program may not accurately reflect the work performed, increasing the risk of noncompliance with federal requirements. Questioned costs: $28,505 Repeat Finding, if applicable: This was not a repeat finding. Recommendation: Camillus should implement procedures to ensure payroll costs charged to federal programs are supported by actual time-and-effort documentation, such as timesheets or certifications, and that allocations are based on actual activity rather than budget estimates. Views of Responsible Officials: Camillus House acknowledges the finding and concurs that payroll costs charged to the SLFRF program must be supported by documentation reflecting actual time and effort. Management has implemented corrective actions to strengthen internal controls over payroll allocations and ensure compliance with Uniform Guidance.
Finding 2024-007: Activities Allowed or Unallowed / Allowable Costs / Cost Principles (Other than Personnel ("OTPS") Allocation) (Material Weakness & Material Noncompliance) Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Criteria: Under 2 CFR Part 200, Subpart E, costs charged to federal awards must be allowable, reasonable, and allocable. Allocable costs must be allocated in proportion to the benefits received and supported by a reasonable, documented allocation methodology applied consistently. A financial management system must provide records that adequately identify the source and application of funds, supported by effective internal controls. Record retention and documentation must support charges to federal awards. Condition/Context: Camillus charged OTPS costs to the SLFRF award without maintaining a documented allocation methodology. For 51 of 60 transactions tested, allocations were based solely on budget estimates rather than actual usage or other reasonable bases. 60 disbursements from the OTPS population included 51 from the Shelter Expansion program. The 51 selections lacked the documented methodology and support for expense allocation. Our sample was not, and was not intended to be, statistically valid. Cause: Camillus' system of internal controls was not properly designed to capture the required information to ensure that OTPS costs were allowable, supported, and properly allocated. Effect or potential effect: Costs charged to the federal awards may not be allocable in accordance with Uniform Guidance. Camillus relied on budget-based allocations and had no formal or documented contemporaneous actual cost allocation amounts for shared OTPS. Staff were not required to retain underlying usage/supporting records, and supervisory review did not detect the lack of allocability support. Questioned Costs: $53,147 Repeat Finding, if applicable: This was not a repeat finding. Recommendation: Management should adopt a written cost allocation plan for OTPS that identifies allocable cost pools and objective allocation bases (e.g., square footage, headcount, device counts, usage logs, transaction volumes, time/usage studies), require contemporaneous documentation (invoices, allocation worksheets, supporting metrics) for each OTPS charge to the award, and perform periodic true-ups from budget to actual activity. Management allocability support before posting costs to the award. Views of Responsible Officials: Camillus House acknowledges the finding and agrees that OTPS costs must be supported by documented, reasonable, and consistently applied allocation methodologies. Management recognizes the need to strengthen internal controls and record retention processes for OTPS charges to federal awards, including the Shelter Expansion program, to ensure compliance with Uniform Guidance. Management is committed to implementing a formal Cost Allocation Plan for OTPS that provides objective, documented allocation methods, and ensures ongoing oversight and compliance.