Finding Text
Significant Deficiency not considered to be Material Weakness
2023-1 Criteria or Specific Requirement - Management is responsible for establishing and
maintaining internal control over compliance. Internal control should allow management
or employees, to identify fraudulent properties and fraudulent tenants before entering into
the program.
Condition - The external auditors noted that while there are some controls in place, they
were not sufficient to identify the fraudulent properties and tenants that were approved for
the granting programs. In addition, there was collusion involved by two case managers that
could not have been prevented by controls in place. Due to these reasons, the external
auditors determined that the control finding is only a significant deficiency and not a
material weakness.
Effect – The lack of controls around monitoring of new properties and tenants enrolled in
the grant programs resulted in fraudulent reimbursement requests being submitted under
the following grants:
a) Housing Opportunities For Persons With Aids (ALN #14.241)
b) Emergency Solutions Grant (ALN #14.231)
Cause – Lack of sufficient monitoring controls over applicants, specific to property and
tenant validation.
Recommendation –The Organization should implement more stringent controls to verify
the applying tenant is who they claim to be, verify the ownership and history of the property
being rented, and involve more individuals at various stages in the review process to
strengthen the risk against collusion.