Finding 1076699 (2023-001)

Finding No. 2023-001: Fraudulent Payroll Activities Resulting in Theft (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Capital Fund Program Federal Assistance Listing Number: 14.872 Compliance Requirement: Allowable Costs Criteria: The Authority should maintain appropriate controls over the payroll process to prevent and/or detect fraud in a timely manner. Condition: The Authority did not have adequate controls over the payroll process, resulting in an employee authorizing excess salary disbursements in an act of fraudulent theft. Context: Costs are considered allowable assuming they are reasonable for the performance of the federal program and are approved by an authorized official. Effect: The Authority allowed for employee to disburse excess salary in an act of fraudulent theft. Cause: The Authority did not have the appropriate controls over the payroll process to prevent and/or detect fraud in a timely manner. Questioned Costs: $18,931 Recommendation: The Authority should review and enhance its policies, procedures, and internal controls to ensure that fraud is prevented and/or detected in a timely manner. Views of Responsible Officials: The Authority agrees with the finding.