Finding Text
Finding 2023-003: Internal Controls over Cash Management
Department of Housing and Urban Development
Federal Program: HOME Investment Partnerships Program
FALN: 14.239
Significant Deficiency
Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must:
(a) Establish and maintain effective internal control over Federal award that provides reasonable
assurance that the non-Federal entity is managing the Federal awards in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal award. These internal controls
should be in compliance 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). . . .”
Condition: An effective internal control system was not in place to ensure compliance with
requirements related to the grant agreement and the Cash Management compliance requirements.
Cause: The Corporation's management had not developed a system of internal controls to ensure
compliance with the compliance requirements listed above.
Effect: There was no formal review/approval of claim reimbursements outside of who prepares
them. The failure to establish an effective internal control system places the Corporation at risk of
noncompliance with the grant agreement and the compliance requirements. A lack of effective
reviews could have also allowed noncompliance with the compliance requirements and allowed
the misuse and mismanagement of federal funds and assets by the review process not ensuring
there was accurate reporting of the activities of the programs.
Recommendation: We recommend that the Corporation establish policies and procedures to ensure
that reimbursement claims prepared are reviewed and approved. The reimbursement claim should
be compared to supporting documentation to ensure accuracy of the claim reimbursement form.
Reimbursement claims should be prepared and submitted timely to help ensure proper period
recognition.
Views of Responsible Officials and Corrective Actions: Management is working to establish the
policies and procedures for reviewing and approving reimbursement claims to ensure that the
claims are properly prepared and submitted timely.