Finding Reference: 2022-002 Federal Agency: Department of Treasury Compliance Requirement: Allowable Costs (Non-Payroll) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Federal Program: 21.023...
Finding Reference: 2022-002 Federal Agency: Department of Treasury Compliance Requirement: Allowable Costs (Non-Payroll) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Federal Program: 21.023 ? Emergency Rental Assistance Grant Award: ERAP I Charles County Condition/Context: FSTA selected a sample of sixty disbursements of rental assistance claims for testing and noted the following errors: ? SMTCCAC mistakenly processed a duplicate payment of $7,700 for an eligible claim, which was one (1) of the 60 rental assistance claims selected for testing in Charles County ERAP I grant. ? SMTCCAC made a payment of $31,800 to a landlord for one (1) of the 60 rental assistance claims selected for testing, for which another agency had made a payment for the same claim before SMTCCAC. Criteria: Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance: Under OMB guidance, Public Law (Pub. L.) No. 107-300, the Improper Payments Information Act of 2002, as amended by Pub. L. No. 111-204, the Improper Payments Elimination and Recovery Act, Executive Order 13520 on reducing improper payments, and the June 18, 2010 Memorandum on Enhancing Payment Accuracy - Any payment that should not have been made or that was made in an incorrect amount, including an overpayment or underpayment, under a statutory, contractual, administrative, or other legally applicable requirement; and includes ? (i) any payment to an ineligible recipient;(ii) any payment for an ineligible good or service; (iii) any duplicate payment; (iv) any payment for services not received; and (v) any payment that does not account for credit for applicable discounts. Cause: Due to staff turnover, the claim of $7,700 was submitted to Finance for payment twice. SMTCCAC did not sufficiently monitor controls to detect the duplicate payment. Additionally, SMTCCAC did not adequately monitor controls to ensure proper review of the shared document among participating ERAP agencies in Charles County to avoid the duplication of benefits for the claim of $31,800. Effect: The duplicate expenditure included in the program cost was deemed unallowable. The landlord involved in the rental assistance claim confirmed receiving two checks, each totaling $7,700. SMTCCAC did not require the landlord to return the duplicate funds, nor did it establish a repayment plan after the landlord expressed a willingness to establish a repayment agreement. Ultimately, the landlord chose to apply the duplicate payment of $7,700 towards future rents for the applicable tenant. During FY2023, Charles County identified the duplicate check and promptly requested the return of duplicate payment of $7,700 from SMTCCAC. During a program file audit by Charles County, it was determined that a duplicate expenditure included in the program cost was deemed unallowable. In FY2022, SMTCCAC paid $31,800 to a landlord who had already received payment from another participating ERAP agency. Despite notifications from SMTCCAC, the landlord has not/was not willing to return the duplicate funds to SMCTTAC. Charles County has notified SMTCCAC on numerous occasions about the need to reimburse the County for the duplicated funds. Once the funds are received, Charles County will return the monies to the State of Maryland. In March of 2023, the County also sent an invoice of $31,800 requesting SMTCCAC to return the $31,800. Questioned Costs: $7,700 ? duplicate payment made to a landlord for a rental assistance claim selected for testing. $31,800 ? duplicate payment made to a landlord for a rental assistance claim selected for testing. Recommendation: We recommend that SMTCCAC implement effective controls to prevent duplicate payments. Additionally, we recommend that SMTCCAC consistently verify the shared document used among participating ERAP agencies in Charles County to ensure that a claim has not been applied for and paid by other agencies. Views of Responsible Officials and Planned Corrective Actions: See Corrective Action Plans section.