Audit 54396

Department of Housing and Urban Development AL #14.239 - HOME Investment Partnership Program Material Weakness 2022-001 Lack of Review Category of Finding ? Eligibility Condition ? During 2022, Accord did not have controls in place to ensure that eligibility criteria calculations were being reviewed and/or approved by someone other than the individual making the initial determination or annual recertification. Criteria ? The HOME Investment Partnership Program has income targeting requirements. Only low-income or very low-income persons as defined in 24 CFR section 92.2, can receive housing assistance. Therefore, the participating jurisdiction must determine if each family is income eligible by calculating the family's annual income, including all persons in the household. 2 CFR section 200.303 requires that organizations who receive federal awards establish and maintain effective internal controls over the federal award that provides reasonable assurance that the organization is managing the federal award in compliance with the federal statues, regulations, and terms and conditions of the award. It also states that controls "should" be in compliance with guidance in "standards for Internal Control in the Federal Government" issued by the Comptroller General of the United State (the Green Book) or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Illustrative specific design and implementation of control activates over eligibility include the following (excerpt from the Green Book): - Proper design of control activities to ensure program compliance should include a process for management to identify and put into effect actions need to carry out specific responses to risks identified in the risk assessment process such as providing benefits to ineligible individuals, calculating amounts to be received for or on behalf of individuals incorrectly, unauthorized changes to system configurations, fraud, unauthorized payments, etc. - Segregations of duties should exist between those determining a participant's eligibility and those reviewing/approving eligibility. Where segregation of duties is not practical, management should select and develop alternative control activities. - Management should establish responsibility and accountability for control activities with management (or other designated personnel) of the unit or function in which the relevant risks reside. Responsible personnel should perform control activities in a timely manner as defined by policies and procedures. Cause ? Due to the limited number of staff employed by the Organization in the Housing department there is a lack of adequate segregation of duties in regard to review of eligibility calculations. Effect ? By not having proper implementation of controls to ensure that certification/recertifications are reviewed and/or approved, there is a risk that individuals are allowed to either enter in the program when they are not eligible, or continue in the program after becoming ineligible. Questioned Costs ? None. Recommendation ? We recommend controls be put in place to ensure the eligibility determinations and rent calculations (initial or recertifications) be reviewed and/or approved by someone other than the individual making the determination. Management?s Response and Corrective Action ? Management agrees with this finding. Beginning in January 2022, management has contracted out the eligibility determination process to a third-party contractor with significant experience in affordable housing and similar processes. Management is working with the contractor to include a second individual in this process so that there will be a review performed by someone other than the individual making the initial determination or annual recertification. Responsible party for corrective action: Robert Pickering, Chief Financial Officer Ernest Johnson, Housing Associate Director Repeat Finding: This is a repeat finding. The finding was reported as 2021-001 in 2021.

Department of Housing and Urban Development AL #14.239 - HOME Investment Partnership Program Material Weakness 2022-001 Lack of Review Category of Finding ? Eligibility Condition ? During 2022, Accord did not have controls in place to ensure that eligibility criteria calculations were being reviewed and/or approved by someone other than the individual making the initial determination or annual recertification. Criteria ? The HOME Investment Partnership Program has income targeting requirements. Only low-income or very low-income persons as defined in 24 CFR section 92.2, can receive housing assistance. Therefore, the participating jurisdiction must determine if each family is income eligible by calculating the family's annual income, including all persons in the household. 2 CFR section 200.303 requires that organizations who receive federal awards establish and maintain effective internal controls over the federal award that provides reasonable assurance that the organization is managing the federal award in compliance with the federal statues, regulations, and terms and conditions of the award. It also states that controls "should" be in compliance with guidance in "standards for Internal Control in the Federal Government" issued by the Comptroller General of the United State (the Green Book) or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Illustrative specific design and implementation of control activates over eligibility include the following (excerpt from the Green Book): - Proper design of control activities to ensure program compliance should include a process for management to identify and put into effect actions need to carry out specific responses to risks identified in the risk assessment process such as providing benefits to ineligible individuals, calculating amounts to be received for or on behalf of individuals incorrectly, unauthorized changes to system configurations, fraud, unauthorized payments, etc. - Segregations of duties should exist between those determining a participant's eligibility and those reviewing/approving eligibility. Where segregation of duties is not practical, management should select and develop alternative control activities. - Management should establish responsibility and accountability for control activities with management (or other designated personnel) of the unit or function in which the relevant risks reside. Responsible personnel should perform control activities in a timely manner as defined by policies and procedures. Cause ? Due to the limited number of staff employed by the Organization in the Housing department there is a lack of adequate segregation of duties in regard to review of eligibility calculations. Effect ? By not having proper implementation of controls to ensure that certification/recertifications are reviewed and/or approved, there is a risk that individuals are allowed to either enter in the program when they are not eligible, or continue in the program after becoming ineligible. Questioned Costs ? None. Recommendation ? We recommend controls be put in place to ensure the eligibility determinations and rent calculations (initial or recertifications) be reviewed and/or approved by someone other than the individual making the determination. Management?s Response and Corrective Action ? Management agrees with this finding. Beginning in January 2022, management has contracted out the eligibility determination process to a third-party contractor with significant experience in affordable housing and similar processes. Management is working with the contractor to include a second individual in this process so that there will be a review performed by someone other than the individual making the initial determination or annual recertification. Responsible party for corrective action: Robert Pickering, Chief Financial Officer Ernest Johnson, Housing Associate Director Repeat Finding: This is a repeat finding. The finding was reported as 2021-001 in 2021.