Audit 405215

Condition During our audit of State Project 60.014 – Homeless Challenge Grant, the County department did not maintain sufficient documentation to support the Annual Median Income (AMI) eligibility determinations for several participants selected for testing. Although the County was ultimately able to obtain sufficient information from the service providers to satisfy the eligibility requirement. This condition indicates that appropriate controls should be established and consistently implemented at the department level to ensure that all required eligibility documentation is maintained, readily available, and auditable upon request. Criteria Chapter 10.550, Rules of the Auditor General require local governments to establish and maintain effective internal controls to ensure compliance with state financial assistance requirements. The Compliance Supplement for Project 60.014 identifies Eligibility as a key compliance requirement and requires recipients to maintain complete and accurate documentation supporting income verification and AMI thresholds for all individuals served. Cause The County’s processes for ensuring required AMI eligibility documentation were collected, reviewed, and retained were not consistently established or formalized. The County relied on service providers to obtain and maintain participant eligibility documentation; however, procedures to ensure these records were routinely submitted to and verified by the County were limited. Additionally, processes to independently review and confirm participant eligibility prior to the provision of services were not consistently implemented. Effect The absence of effective internal controls increases the risk that services may be provided to ineligible participants and results in noncompliance with state project requirements. Continued noncompliance may adversely impact the County’s standing with the program and could result in questioned costs, funding disallowances, or potential suspension or termination of grant funding. Recommendation We recommend that the County establish and implement effective internal controls over eligibility verification. Controls should ensure that all required AMI documentation is collected, reviewed, and retained by the County prior to the provision of services. This may include implementing standardized eligibility verification procedures, requiring timely submission of supporting documentation from service providers, performing supervisory reviews, and providing training to staff and service providers on documentation requirements outlined in the State Project Compliance Supplement.