Audit 403488

Reference Number: 2024-001 Program Name: 14.267 Continuum of Care Reference Number: 2025-001 Program Name: 14.267 Continuum of Care Description: Procurement Criteria: 2 CFR 180.300 and 2 CFR 200.214 prohibit nonfederal entities from contracting with parties that are suspended or debarred. For covered transactions equal to or exceeding $25,000, the Organization must verify that the vendor is not excluded by checking the System for Award Management (SAM.gov) or through other approved methods. Additionally, HUD procurement requirements under 2 CFR 200.318 require entities to ensure vendor eligibility. When multiple transactions with the same vendor exceed $25,000 in aggregate, the total amount should be considered in determining whether suspension or debarment requirements apply. Condition: The Organization entered into multiple rental agreements with the same rental companies. While each contract was less than $25,000, total payments to the rental companies exceeded $25,000. The Organization did not perform or document a suspension and debarment verification. Questioned Costs: None identified. Cause: The Organization did not follow their procurement policy. The Organization’s procurement policy states that “no contract shall be made to the parties listed on the General Services List of Parties Excluded from Federal Procurement or Non-procurement Programs in accordance with E.O.’s 12549 and 12689”. Effect: The Organization is not in compliance with federal and HUD procurement requirements and may have contracted with a suspended or debarred party. This increases the risk of questioned costs. Identification of a Repeat Finding: This is not repeat finding. Auditors’ Recommendation: We recommend the Organization implement procedures to ensure SAM.gov verification is performed annually on all covered transactions and prior to signing leases with new rental companies. Views of Responsible Officials: See attachment for the Organization’s corrective action plan.

Reference Number: 2025-002 Program Name: 14.267 Continuum of Care Description: Special Tests and Provisions Criteria: 24 CFR section 578.51(g) states that when grant funds are used to pay rent, the rent paid must be reasonable in relation to rents being charged for comparable units considering relevant features. Condition: Previously the Organization had a rent reasonableness form that was filled out to ensure the rent paid by the Organization was allowable. However, during our testing of special tests and procedures, it was determined the Organization stopped filling out the rent reasonableness forms. The Organization did not have a control in place to ensure the rent paid was reasonable and allowable. Questioned Costs: $1,519,018. Cause: The Organization had significant turnover and this control was overlooked. Effect: Completing rent reasonability testing ensures the cost-effectiveness of funds and fair market practices of Continuum of Care funded housing. Identification of a Repeat Finding: This is not repeat finding. Auditors’ Recommendation: We recommend the Organization review their control procedures related to the lease signing. Views of Responsible Officials: See attachment for the Organization’s corrective action plan.