Department of Housing and Urban Development Continuum of Care, Federal Financial Assistance Listing 14.267, Federal awards MN0238L5K002209, MN0238L5K002310, MN0448L5K002203, MN0448L5K002304, MN0457L5K012203, MN0457L5K012304, MN0449L5K002201, and MN0449L5K002302 included under Federal Financial Assistance Listing 14.267 on the Schedule Special Tests and Provisions Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. When grant funds are used by Catholic Charities to pay for rent, Catholic Charities must ensure that the rents do not exceed rents currently being charged by the same owner for comparable unassisted units and the portion of grant funds may not exceed HUD-determined fair market rents. These calculations should be reviewed prior to the rent being paid. Condition: During our testing, we identified eight instances where the participant’s file had incomplete or inaccurate documentation of review and approval for the rent reasonableness test. Cause: Catholic Charities’ internal controls did not operate as designed, which resulted in rent reasonableness tests not being reviewed before the rent was paid. Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 10 tenants were selected out of 56 tenants for rent reasonableness testing. Repeat Finding from Prior Years: Yes, 2024-001 Recommendation: We recommend management revise their internal control procedures with applicable employees to make sure that all rent reasonableness tests are performed and reviewed by the appropriate personnel prior to the rent being paid. Views of Responsible Officials: Management is in agreement with this finding.
Department of Housing and Urban Development Continuum of Care, Federal Financial Assistance Listing 14.267, Affects all grant awards included under Federal Financial Assistance Listing 14.267 on the Schedule Procurement, Suspension, and Debarment Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform to procurement standards in sections 200.317 through 200.327. Condition: Catholic Charities has documented procurement and suspension and debarment procedures that conform to applicable federal standards regarding procurement and testing vendors for suspension and debarment; however, the procedures were not followed for four vendors selected for testing for procurement and one for suspension and debarment. Cause: Catholic Charities did not have adequate internal controls in place to ensure that the processes laid out in their procurement policy regarding the process of obtaining quotes to support procurement and testing vendors for suspension and debarment were followed. Effect: Payments could be made to vendors who have higher costs than other vendors or who were suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 17 vendors out of 83 total transactions were selected for testing, which accounted for $81,494 of $681,188 federal program expenditures. Repeat Finding from Prior Year(s): Yes, 2024-002 Recommendation: We recommend Catholic Charities enhance internal control procedures to ensure all procurement and suspension and debarment verification procedures are performed prior to entering into the transactions. Views of Responsible Officials: Management agrees with the finding.
Department of Housing and Urban Development Continuum of Care, Federal Financial Assistance Listing 14.267, Affects all grant awards included under Federal Financial Assistance Listing 14.267 on the Schedule Activities Allowed or Unallowed/Allowable Cost Principles, Matching and Earmarking, Period of Performance Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Internal control procedures should ensure expenses and other records tracking allowable costs, allowable activities, period of performance, indirect expenses, matching and earmarking are approved and the approval is documented in a timely manner. Condition: Catholic Charities has documented review procedures that conform to applicable federal standards regarding activities allowed or unallowed, allowable cost principles, matching, earmarking, and period of performance. However, the procedures were not followed for 34 of 60 selections for expense items, seven of 12 employees tested for payroll expenditures did not have documented approval on the allocation rate applied, as well as two of three months selected for testing for matching, earmarking, and indirect expenses. Additionally, for four of 12 employees errors in the payroll calculations were identified that were not corrected or identified by Catholic Charities and for one employee there was no evidence of approval on the hours paid for two pay periods during the year. Cause: Catholic Charities’ internal controls did not operate as designed, which resulted in transactions not being reviewed timely or the review process not being formally documented and maintained. Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program. Questioned Costs: None reported.Context/Sampling: Activities Allowed or Unallowed/Allowable Cost Principles and Period of Performance: Expenses: A nonstatistical sample of 60 transactions out of 2,324 total transactions were selected for testing, which accounted for $23,406 of $681,188 federal program expenditures. Payroll expenses: A nonstatistical sample of 12 employees out of 61 were selected for testing, which accounted for $196,230 of $473,784 federal program expenditures. Indirect expenses: A nonstatistical sample of three months out of 12 were selected for testing. Matching and Earmarking: A nonstatistical sample of three months out of 12 were selected for testing. Repeat Finding from Prior Year(s): No Recommendation: We recommend Catholic Charities enhance internal control procedures to ensure the control process is properly supported and the documentation is retained. Views of Responsible Officials: Management agrees with the finding.
Department of Housing and Urban Development Continuum of Care, Federal Financial Assistance Listing 14.267, Federal awards MN0308L5K012209, MN0203L5K002308, MN0399L5K012205, MN0448L5K002203, MN0457L5K012203, and MN0449L5K002302 included under Federal Financial Assistance Listing 14.267 on the Schedule Activities Allowed or Unallowed/Allowable Cost Principles and Period of Performance Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Catholic Charities has documented review procedures that conform to applicable federal standards regarding indirect expenses; however, the procedures failed to detect that indirect costs were billed at the wrong rate as allowed under uniform guidance. Cause: Catholic Charities did not have adequate internal controls in place to ensure that the de minimis rates were appropriately billed as allowed under uniform guidance. Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of three months out of 12 were selected for testing. Repeat Finding from Prior Year(s): No. Recommendation: We recommend Catholic Charities enhance internal control procedures to ensure all indirect cost are correctly calculated and billed. Views of Responsible Officials: Management agrees with the finding.
Department of Housing and Urban Development Continuum of Care, Federal Financial Assistance Listing 14.267, Federal awards MN0308L5K012310, MN0203L5K002308, MN0203L5K002409, MN0399L5K012306, MN0448L5K002203, and MN0448L5K002304 included under Federal Financial Assistance Listing 14.267 on the Schedule Earmarking Material Weakness in Internal Control Over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Catholic Charities has documented review procedures that conform to applicable federal standards regarding earmarking; however, the procedures failed to detect that administrative costs billed exceeded the 10% allowed under uniform guidance. Cause: Catholic Charities did not have adequate internal controls in place to ensure that the administrative costs were appropriately billed as allowed under uniform guidance. Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program. Questioned Costs: MN0308L5K012310 for $7,709; MN0203L5K002308 for $1,480; MN0203L5K002409 for $139; MN0399L5K012306 for $5,679; MN0448L5K002203 for $1,065; and MN0448L5K002304 for $1,234 Context/Sampling: A nonstatistical sample of three months out of 12 were selected for testing. Repeat Finding from Prior Year(s): No. Recommendation: We recommend Catholic Charities enhance internal control procedures to ensure all administrative costs are correctly calculated and billed. Views of Responsible Officials: Management agrees with the finding.