Audit 374432

2025 – 001 Allowable Costs Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Housing Opportunities for Persons with AIDS (HOPWA) AL Number: 14.241 Award Period: 7/1/24 - 6/30/25 Type of Finding: Significant deficiency in Internal Control over Compliance and Compliance Criteria or Specific Requirement According to §200.303 Internal controls of 2 CFR Part 200, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition and Context During our testing, we noted four samples where the Organization was not maintaining accurate records to support the payroll costs allocated to the grant. Based on the actual payroll costs of the employees charged to the grant the Organization could have charged additional costs to the grant. Effect Noncompliance results in potential for incorrect payroll costs allocated to federal grants. Questioned Costs None identified. Cause The issuance was caused by management oversight resulting in wage allocations not being updated and reviewed. Recommendation We recommend the Organization update their grant allocation process to ensure accurate wage rates are used to calculate the allocations. Views of Responsible Officials Beginning with July 2025, the Organization will ensure that current month costs are a direct reflection of that month's costs of the allocated employees using a labor rate equal to ((total allowable salaries and wages + total allowable employee benefits and taxes) / total allowable hours worked) * applicable HOPWA-related hours worked.