Audit 394609

#2025-002 – Wage Allocations Federal Agency: Department of Housing and Urban Development (HUD) Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Type of Finding: • Significant deficiency in internal control over compliance Criteria: Wages should be allocated to federal and state programs on the basis of time spent in each program. Condition: 1 out of 40 payroll transactions reviewed had differences between the wages that were charged to the grant and the wages that should have been charged to the grant based on the number of hours worked. Questioned Costs: $1,540. Cause: Payroll software coded manager time as admin time instead of the specific grant funding code. Effect: Wages could be charged to the wrong federal awards and not detected and corrected. Recommendation: We recommend that management review payroll software inputs and outputs for accuracy prior to completing grant claims. Response: HALO’s management concurs with this finding.

#2025-003 – Rent Reasonableness Federal Agency: Department of Housing and Urban Development (HUD) Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Type of Finding: • Noncompliance not resulting in an opinion modification • Significant deficiency in internal control over compliance Criteria: HUD requires that recipients ensure that rent is reasonable compared to similar unassisted units and maintain documentation supporting the determination; rent paid with CoC leasing funds may not exceed Fair Market Rent (FMR); and rent reasonableness determinations must be completed before providing assistance. Condition: During testing of rent reasonableness controls and documentation, the following exceptions were identified: • 4 of 4 rent reasonableness determinations lacked evidence of an independent review and approval. • There were 8 instances (2 units x 4 months) where rents exceeded HUD FMR limits. • 3 of 20 rent reasonableness determinations were not completed prior to the lease start date. Questioned Costs: $392. Cause: The Organization did not have sufficiently defined or consistently followed procedures for documenting independent review of rent reasonableness determinations, verifying rents against applicable FMR limits before authorizing payments, and ensuring determinations were complete prior to lease start dates. Effect: Units are approved and paid at non-compliant rent levels, federal funds are used for rents above allowable limits, and documentation does not meet HUD standards, potentially leading to questioned costs, required repayment, and findings in future monitoring or audits. Recommendation: We recommend that management establish a mandatory review and approval step for all rent reasonableness forms, require staff to verify current FMR limits before approving leasing amounts, and require rent reasonableness completion before any lease start date or payment authorization. Response: HALO’s management concurs with this finding