Audit 402403

Finding #2025-003 Type: Significant deficiency Assisting Listing Number: 14.267 Federal Agency: U.S. Department of Housing and Urban Development Name of Federal Program: Continuum of Care Requirement: Uniform Guidance (2 CFR §200.430) requires that charges to federal awards for salaries and wages be supported by records that accurately reflect the work performed and be supported by an internal control system which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: The Agency supported payroll allocations to federal programs using detailed Google Calendar records, discussions of employee responsibilities, and supervisory review. While this documentation provided insight into employee activities, it was not maintained in a standardized or streamlined format that readily supported audit procedures or served as contemporaneous payroll documentation for compliance purposes. Context: Personnel costs were allocated based on employees’ expected duties as discussed during the budgeting process. Program directors reviewed employee activities using Google Calendar and supervisory knowledge, and the finance team reviewed the resulting allocations for overall reasonableness, including verifying that amounts charged did not exceed gross payroll. The Agency operates with limited administrative resources and relies on existing tools to support program operations. Cause: Due to resource and funding constraints, the Agency has not implemented a more sophisticated time tracking system. Management instead relied on existing scheduling tools and supervisory review as a practical and cost effective means of supporting payroll allocations; however, these tools were not designed to produce compliance ready documentation in a consolidated or audit efficient format. Effect: Although supporting documentation existed and payroll allocations appeared reasonable, the lack of streamlined and standardized documentation limited the ability to readily demonstrate compliance with Uniform Guidance requirements. This represents a deficiency in internal control over compliance related to personnel costs charged to federal awards. Questioned Costs: None. Based on audit procedures performed, the allocations appeared reasonable; however, required supporting documentation was not maintained. Recommendation: We recommend that management evaluate cost effective options to enhance documentation of personnel cost allocations to federal programs. Such options may include simplified time and effort tracking or standardized summary documentation that can be implemented within existing resource constraints while improving support for compliance with Uniform Guidance requirements. Management’s Response: Management agrees with the finding. The Agency’s current approach was designed to balance compliance needs with limited resources. Management will assess feasible improvements to its documentation practices to enhance support for payroll allocations to federal awards while remaining mindful of funding and staffing constraints.

Finding #2025-004 Type: Noncompliance Assisting Listing Number: 14.267 Federal Agency: U.S. Department of Housing and Urban Development Name of Federal Program: Continuum of Care Requirement: Uniform Guidance requires that the auditee submit the Data Collection Form (Form SF SAC) and reporting package to the Federal Audit Clearinghouse within the earlier of 30 days after receipt of the auditor’s reports or nine months after the end of the audit period, unless a waiver is granted by the cognizant or oversight agency. Condition: For the fiscal year ended June 30, 2024, the Agency submitted its Data Collection Form and reporting package to the Federal Audit Clearinghouse after the applicable submission deadline. Context: During the audit completion and submission period, the Agency experienced senior management turnover, including changes in key financial leadership positions. These transitions occurred close to the reporting deadline and affected continuity over audit closeout and submission responsibilities. Cause: Due to the management transitions, responsibilities related to coordination, review, and final submission of the Single Audit reporting package were not clearly assigned or monitored, resulting in delays in completing the submission process by the required deadline. Effect: Failure to submit the Data Collection Form timely constitutes noncompliance with reporting requirements under Uniform Guidance and may be considered by federal agencies when assessing federal programs for risk. Questioned Costs: None. Recommendation: The Agency should establish and document internal procedures for Single Audit closeout and Federal Audit Clearinghouse submissions, including clearly assigned responsibility, internal deadlines aligned with Uniform Guidance requirements, and supervisory review to ensure reporting packages are submitted timely, regardless of personnel changes. Management’s Response: Management acknowledges the late submission and attributes the delay primarily to senior management turnover occurring during the audit completion period. Management has taken corrective action by clarifying roles and responsibilities for Single Audit submissions, establishing internal timelines aligned with Uniform Guidance deadlines, and assigning oversight responsibility to ensure future Data Collection Forms and reporting packages are submitted timely.