Audit 38140

U.S. Department of Treasury. Program Name: COVID 19: Emergency Rental Assistance Program. Assistance Listing Number: 21.023. Finding: 21.023. Criteria: In accordance with Uniform Guidance 2 CFR 200.516 - Audit Findings, known or likely fraud affecting a Federal Award, as well as known questioned costs that are greater than $25,000 must be reported as audit findings in the schedule of findings and questioned costs. Condition: Although the County has controls in place to ensure compliance with their Emergency Rental Assistance Program's policies and procedures, which include fraud prevention procedures, fraud did occur. During 2022, the County discovered (and reported to the auditors) that eight (8) landlord applicants committed fraudulent activity that included the submission of documents that were modified electronically prior to their submission, stolen identity, misrepresentation and inability to repay funds within a timely manner. Funds were disbursed to these applicants prior to the County becoming aware of the fraud. Cause: Eight (8) landlord applicants committed fraudulent activity. Effects: Eight (8) applicants received funding, although the fraudulent activity was committed by the applicants. Questioned Costs: $144,692. Recommendation: We recommend the County strengthen procedures and/or implement additional procedures to reduce the potential of fraud occuring. Auditee's Reponse: In addition to continuing to follow the County's policies and procedures developed in accordance with Emergency Rental Assistance guidelines established by the U.S. Department of Treasury, the County implemented additional procedures in May 2022 to enhance fraud prevention activities. The updated procedures required HomeFirst Gwinnett, the subrecipient managing the Emergency Rental Assistance Program, to perform additional verification and approval procedures to detect fraudulent applications before they are presented for payment. HomeFirst Gwinnett would no longer accept documentation that had been completely generated electronically as sole proof of property ownership and added another level of file review of property deed records for landlord property owners utilizing the authorized property deed record website. All assistance above $10,000 will require final review/approval by the HomeFirst Gwinnet director or manager. As new applicants input their information into the County's vendor portal, the Treasury Division in the Department of Financial Services would verify the validity of those records and would not allow the registration to complete unless they met the required criteria. Any suspicious activity was reported to management promptly, and for suspected fraudulent applicants, those applicants accounts were locked as a preventative control so that no future transactions could be processed while the account was under investigation. For individual landlords, ACH payment was no longer an option and they were required to physically present present a valid picture ID to receive a check at the Program Office. Additional training on the revised procedures was provided to program staff. While the additional prevention measures noted above did deter fraudulent attempts made on the program, Gwinnett County tracked and reported eight landlord cases of suspected fraud in 2022. The suspected fraud was forwarded to the Gwinnett County Police Department's (GCPD) Financial Crimes Unit. Any funds recovered will be returned to the U.S. Department of the Treasury. Gwinnett County's emergency rental assistance program, Project RESET 2.0 (PR2.0), concluded on Thursday, December 29, 2022.

U.S. Department of Treasury. Program Name: COVID 19: Emergency Rental Assistance Program. Assistance Listing Number: 21.023. Finding: 21.023. Criteria: In accordance with Uniform Guidance 2 CFR 200.516 - Audit Findings, known or likely fraud affecting a Federal Award, as well as known questioned costs that are greater than $25,000 must be reported as audit findings in the schedule of findings and questioned costs. Condition: Although the County has controls in place to ensure compliance with their Emergency Rental Assistance Program's policies and procedures, which include fraud prevention procedures, fraud did occur. During 2022, the County discovered (and reported to the auditors) that eight (8) landlord applicants committed fraudulent activity that included the submission of documents that were modified electronically prior to their submission, stolen identity, misrepresentation and inability to repay funds within a timely manner. Funds were disbursed to these applicants prior to the County becoming aware of the fraud. Cause: Eight (8) landlord applicants committed fraudulent activity. Effects: Eight (8) applicants received funding, although the fraudulent activity was committed by the applicants. Questioned Costs: $144,692. Recommendation: We recommend the County strengthen procedures and/or implement additional procedures to reduce the potential of fraud occuring. Auditee's Reponse: In addition to continuing to follow the County's policies and procedures developed in accordance with Emergency Rental Assistance guidelines established by the U.S. Department of Treasury, the County implemented additional procedures in May 2022 to enhance fraud prevention activities. The updated procedures required HomeFirst Gwinnett, the subrecipient managing the Emergency Rental Assistance Program, to perform additional verification and approval procedures to detect fraudulent applications before they are presented for payment. HomeFirst Gwinnett would no longer accept documentation that had been completely generated electronically as sole proof of property ownership and added another level of file review of property deed records for landlord property owners utilizing the authorized property deed record website. All assistance above $10,000 will require final review/approval by the HomeFirst Gwinnet director or manager. As new applicants input their information into the County's vendor portal, the Treasury Division in the Department of Financial Services would verify the validity of those records and would not allow the registration to complete unless they met the required criteria. Any suspicious activity was reported to management promptly, and for suspected fraudulent applicants, those applicants accounts were locked as a preventative control so that no future transactions could be processed while the account was under investigation. For individual landlords, ACH payment was no longer an option and they were required to physically present present a valid picture ID to receive a check at the Program Office. Additional training on the revised procedures was provided to program staff. While the additional prevention measures noted above did deter fraudulent attempts made on the program, Gwinnett County tracked and reported eight landlord cases of suspected fraud in 2022. The suspected fraud was forwarded to the Gwinnett County Police Department's (GCPD) Financial Crimes Unit. Any funds recovered will be returned to the U.S. Department of the Treasury. Gwinnett County's emergency rental assistance program, Project RESET 2.0 (PR2.0), concluded on Thursday, December 29, 2022.