Audit 414138

Cash Disbursement Approval Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: 2024-2025 and 2025-2026 Award Period: October 1, 2024 – September 30, 2025 and October 1, 2025 – September 30, 2026 Type of Finding: • Material Weakness in Internal Control Over Compliance and Other Matter Criteria or specific requirement: The organization's financial policies require that expenditures receive appropriate documented approval prior to payment and that duties related to authorization, custody of assets, and recordkeeping be appropriately segregated whenever practical. These controls help ensure expenditures are valid, authorized, and made in accordance with organizational policies. Condition: During testing of disbursement transactions, we noted instances in which disbursements were processed without evidence that the organization's established approval procedures were followed. In addition, the Chief Financial Officer (CFO) maintained sole access to the organization's Amazon purchasing account, including the ability to initiate purchases and process related disbursements without independent review or approval. Questioned Costs: $1,673 (known) $5,072 (likely) Context: The Organization processed disbursements related to federal programs during the audit period. The identified control deficiencies affected the Organization's controls over the authorization and monitoring of expenditures charged to federal awards. Cause: Established disbursement approval procedures were not consistently followed, and access to the Amazon purchasing platform was not structured to provide adequate oversight or segregation of duties. Effect: The absence of required approvals and the lack of segregation of duties increase the risk of unauthorized purchases, improper expenditures, and errors or irregularities not being detected in a timely manner. Repeat Finding: No Recommendation: We recommend the organization strengthen controls over purchasing and disbursement activities by requiring documented approval of all disbursements prior to payment, establishing independent review and approval of purchases made through the Amazon account, limiting sole control of purchasing accounts by assigning secondary administrative access or implementing periodic management or board review of purchasing activity, monitoring compliance with disbursement approval policies through periodic review of transactions and supporting documentation. Views of Responsible officials and planned corrective actions: Management agrees with the finding and will enhance controls over purchasing and disbursement activities. Procedures will be implemented to ensure all expenditures receive documented approval and that Amazon account activity is subject to independent review. Management will also evaluate opportunities to improve segregation of duties and oversight of purchasing transactions.

Procurement Policy Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: 2024-2025 and 2025-2026 Award Period: October 1, 2024 – September 30, 2025 and October 1, 2025 – September 30, 2026 Type of Finding: • Significant Deficiency in Internal Control Over Compliance and Other Matter Criteria or specific requirement: The Uniform Guidance requires non-federal entities expending federal awards to maintain and follow documented procurement policies and procedures that comply with federal requirements, including standards for competition, methods of procurement, contractor oversight, and suspension and debarment verification. Condition: The Organization has not adopted a written procurement policy governing purchases made with federal funds. As a result, procurement activities are not guided by documented procedures designed to ensure compliance with Uniform Guidance requirements. Questioned Costs: None Context: During testing of internal controls over compliance related to procurement and suspension and debarment requirements, we noted that the Organization was not able to locate a written procurement policy in place for federal awards. The Organization has had transition of staff and may have implemented in the past but current staff could not locate the policy. Cause: Management had not established formal procurement policies and procedures that incorporate federal award requirements. Effect: Without a documented procurement policy, the Organization is at increased risk of noncompliance with federal procurement requirements, including inadequate competition, inconsistent purchasing practices, failure to perform required suspension and debarment checks, and lack of documentation supporting procurement decisions. Repeat Finding: No Recommendation: We recommend management develop, approve, and implement a written procurement policy that complies with Uniform Guidance requirements. The policy should address purchasing thresholds, methods of procurement, documentation requirements, conflict-of-interest standards, contractor oversight, and procedures for verifying suspension and debarment status prior to contract award. Views of Responsible officials and planned corrective actions: Management agrees with the finding and will develop and formally adopt a procurement policy consistent with Uniform Guidance requirements. Management is working on policies and procedures and anticipates implementation prior to the next fiscal year end.