Audit 414441

Internal Control over Compliance with Indirect Costs and Earmarking Requirements Federal Agency: U.S. Department of Housing and Urban Development Assistance Listing Number: 14.267 Federal Program Name: Continuum of Care Pass-through Entity: King County Regional Homelessness Authority Pass-through Award Numbers: WA0363L0T002307, WA0363L0T002408, WA0412D0T002305 Criteria: Under 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over compliance with the requirements of federal awards, including the calculation of allowable indirect costs and monitoring earmarking requirements. Condition: There was no documented review of the indirect cost calculations or earmarking for administrative costs on the award invoices tested. Cause and Context: During the year ended December 31, 2025, a single employee was tasked with preparing and submitting award invoices. Effect: Inadequate internal controls over requirements for indirect costs and earmarking may result in the Organization requesting reimbursement for disallowed costs. Questioned Costs: None. Recommendation: We recommend that management implement a formal review of award invoices before they are submitted to the grantor for reimbursement, including review of the indirect cost calculation and administrative cost tracking for earmarking requirements, and retains documentation of this review. Views of Responsible Officials: There is no disagreement with the finding.