Audit 410687

Finding 2025-002 Material Weakness in internal control over compliance U.S. Department of Housing and Urban Development - Healthy Homes Production Program ALN 14.913 Grant period 1/1/25-12/31/25 A/B - Activities Allowed/Allowable Costs Criteria: The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition: During our testing of disbursements, we noted one pay period of the three sampled did not have documentation of approval. Cause: Policies and procedures were not appropriately adhered to in certain instances to ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect: Without a documented review control, there is an increased risk that errors in the costs charged to a major program may not be detected and corrected timely. Questioned Costs: None Context/ Sampling: The Organization charged payroll to the Healthy Homes Production program 33 times during 2025. For the 3 items tested, supporting documentation was present; however, 1 of the pay periods tested lacked documentation of review and approval prior to submission. Our testing did not identify material allowed activities/allowable cost errors or known noncompliance. However, the absence of documented review represents a deficiency in internal control over compliance for the Activities Allowed/Allowable Costs compliance requirement. Repeat Finding: No Recommendation: We recommend that the Organization ensure its policies and procedures are followed on a consistent basis. View of Responsible Officials: Management agrees with the finding and will ensure adherence with policies and procedures in future transactions.

Finding 2025-003 Material Weakness in internal control over compliance U.S. Department of Housing and Urban Development - Healthy Homes Production Program ALN 14.913 Grant period 1/1/25-12/31/25 L - Reporting Criteria: The terms and conditions of the Federal award require the Organization to submit quarterly financial and performance reports. Effective internal control over compliance should include documented review and approval of such reports before submission to the Federal agency. Condition: During our testing of reporting, we noted none of the four sampled quarterly reports had documentation of approval. Cause: Policies and procedures were not appropriately adhered to in certain instances to ensure that an appropriate level of review and approval was completed prior to submitting the quarterly report. Effect: The Organization was able to provide copies of the reports submitted; however, the Organization did not maintain documentation evidencing that the reports were reviewed and approved by an individual with appropriate knowledge of the Federal award requirements prior to submission. Questioned Costs: None Context/ Sampling: The Organization submitted 4 quarterly financial reports and 4 quarterly performance reports for the Healthy Homes Production program during 2025. For the items tested, the reports were submitted; however, all of the reports tested lacked documentation of review and approval prior to submission. Our testing did not identify material reporting errors or known noncompliance with the content of the reports. However, the absence of documented review represents a deficiency in internal control over compliance for the Reporting compliance requirement. Repeat Finding: No Recommendation: We recommend that the Organization implement a formal review and approval process for all required Federal financial and performance reports before submission. The process should include: a) Preparation of reports using reconciled financial and programmatic records; b) Review of reported expenditures to supporting accounting records; c) Review of performance data to supporting program records; d) Review for consistency with award terms, reporting instructions, and due dates; e) Approval by an individual independent of report preparation; and f) Retention of evidence of review, such as dated sign-offs, approval emails, etc. View of Responsible Officials: Management agrees with the finding and will ensure adherence with policies and procedures in future transactions.