Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: PA0504L3T002211 - FY25, PA0504L3T002312 - FY25, PA0911L3T002204 - FY25, PA0911L3T002305 - FY25, PA1067L3T002200 - FY25, PA1067L3T002301 - FY25 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: - Material Weakness in Internal Controls over Procurement, Suspension and Debarment - Noncompliance Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement, suspension, and debarment. The Organization should have internal controls designed to ensure compliance with those provisions. 2 CFR section 200.318(c) and 48 CFR sections 52.203-13 and 52.303-16 requires entities to maintain standards of conduct that cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts. Condition: We noted the Organization did not have adequate internal controls designed to ensure all vendors were compliant with the Organization’s conflict of interest policy, procurement, suspension and debarment requirements and the requirements of Uniform Guidance. Questioned Costs: Known: $45,096 Context: Lack of contracts, agreements and procurement, suspension and debarment procedures when acquiring vendors for federal grant expenditures. Through our testing of 60 vendors, we identified 3 which did not follow the proper procurement, suspension and debarment practices per federal requirements. Of these 3 vendors, we identified a total of $45,096 of known questioned costs within the program tested, and furthermore $344,164 of likely questioned costs based on the population. Cause: The Organization had procured vendors without following the required procurement, suspension, and debarment procedures. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance. Recommendation: We recommend that management review the procurement, suspension, and debarment requirements for federal programs as well as the organization's policies related to these areas. Management should ensure that such practices are being followed to comply with federal requirements. We also recommend that all current vendors in use are assessed and considered for compliance with procurement, suspension and debarment practices. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding. See attached corrective action plan.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: PA0433L3T002312 - FY25, PA0433L3T002413 - FY25, PA0504L3T002211 - FY25, PA0504L3T002312 - FY25, PA0010L3T002316 - FY25, PA0004L3T002310 - FY25, PA0004L3T002411 - FY25, PA0681L3T002209 - FY25, PA0681L3T002310 - FY25, PA0911L3T002204 - FY25, PA0911L3T002305 - FY25, PA1067L3T002200 - FY25, PA1067L3T002301 - FY25 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: - Material Weakness in Internal Controls over Cash Management - Noncompliance Criteria or specific requirement: Per the Uniform Guidance (2 CFR §200.305), nonfederal entities must minimize the time between the transfer of funds from the U.S. Treasury and the disbursement of program purposes. Drawdowns must be based on immediate cash needs and supported by incurred expenses. Condition: The entity drew down federal funds in excess of the amounts incurred for allowable expenses. Specifically, cash management procedures did not ensure that funds drawn down were limited to actual expenditures incurred, resulting in excess cash balances held temporarily beyond the allowable timeframe. Questioned Costs: Known: $3,547,358 Context: Through discussions with management and other required audit procedures, we noted that Pathways had drawn down $3,547,358 of advanced funding due to uncertainty of access to these funds in the future. The excess of these funds was subsequently returned to the funder. Cause: Due to pending changes in federal funding, the entity was concerned about its access to funding for contracts that were already executed. Effect: This deficiency resulted in noncompliance with federal cash management requirements and exposed to entity to potential interest liabilities and reputational risk. It also indicates a reasonable possibility that material noncompliance with federal requirements may not be prevented or detected and corrected on a timely basis. Repeat Finding: No Recommendation: We recommend that management ensure drawdowns are strictly aligned with incurred and allowable expense. This should include: - Pre-drawdown verification of expense documentation - Monthly reconciliations of drawdown activity to actual expenditures - Training for staff involved in federal fund management on Uniform Guidance. Views of responsible officials: There is no disagreement with the audit finding. See Corrective Action Plan.