Audit 412620

Finding 2025-001: Payroll Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Numbers: 14.267 Identification Number and Year: FKT4QJJ4MKF5 2025 Award Period: 1/1/2025-12/31/2025 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Federal regulations and the Organization’s internal policies require payroll costs charged to federal awards to be supported by documentation evidencing supervisory review and approval of employee timecards. Condition: During testing of payroll transactions charged to the federal program, we noted that documentation evidencing management’s review and approval of employee timecards was not available. This condition occurred because the Organization transitioned to a new payroll system during the period, and historical timecard review documentation was not retained or migrated to the new system. Questioned Costs: None Context: Payroll costs charged to the federal program were supported by payroll registers and employee compensation records; however, evidence of supervisory review of timecards could not be provided for the period tested. Cause: The Organization changed payroll systems during the year and did not maintain or retain documentation evidencing management’s review of employee timecards during the transition. Effect: Expenses could be charged to the grant that were not incurred and not be caught or corrected timely. Repeat Finding: No Recommendation: We recommend that management implement and maintain procedures to ensuredocumented review and approval of employee timecards, including retaining such documentation during system transitions, to support payroll costs charged to federal programs and ensure compliance with federal requirements.

Finding 2025-002: Review of Rent Reasonableness Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Numbers: 14.267 Identification Number and Year: FKT4QJJ4MKF5 2025 Award Period: 1/1/2025-12/31/2025 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Federal regulations require a review of the rent reasonableness to be supported by documentation evidencing supervisory review and approval. Condition: During testing of rental assistance payments charged to the federal program, we noted that documentation evidencing management’s review and approval of rent reasonableness prior to the start of the lease, was not available. Questioned Costs: None Context: Rental assistance payments charged to the federal program were supported by lease agreements; however, evidence of rent reasonableness determination at the start of the lease term could not be provided for testing selections. Cause: The Organization did not have adequate procedures in place to ensure rent reasonableness assessments were performed, documented, and retained for units receiving rental assistance under the Continuum of Care Program. Effect: The Organization was unable to demonstrate that rental assistance payments complied with HUD rent reasonableness requirements prior to the start of the lease agreement, increasing the risk that federal funds were used to support rental costs that exceeded reasonable market rates. Repeat Finding: No Recommendation: We recommend that management implement and maintain procedures to ensure rent reasonableness determinations are performed, documented, and retained for all units receiving rental assistance prior to the first lease payment, on an annual basis, and if rental rates charged for the same unit are increased. Such documentation should be maintained in participant files and preserved in accordance with federal record retention requirements to support compliance with HUD regulations.