Finding Text
Item 2024-007: Schedule of expenditures of federal awards presentation
Federal Agency: U.S. Department of Housing and Urban Development; U.S. Department of Treasury
Program: HOME Investment Partnerships Program (ALN 14.239); Housing Trust Fund (ALN 14.275);
COVID-19 - Emergency Rental Assistance (ALN 21.023); Homeowner Assistance Fund Program (ALN 21.026)
Pass-through Entity: None
Federal Assistance Identification Number or Pass-Through Number: None
Federal Award Year: Year ended June 30, 2024
Type of Finding: Material Weakness in Internal Control over Compliance
Criteria: The Agency is required to comply with 2 CFR section 200.510(b) which requires that the auditee must prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR section 200.502. Further, the Agency is required to comply with 2 CFR 200.512 which requires that the information included in the reporting package is accurate and complete.
Condition: We noted the following errors in the original SEFA we received for the audit:
Loans provided under the HOME Investment Partnerships Program (ALN 14.239) were understated by $8,641,271
Loans provided under the Housing Trust Fund (ALN 14.275) were understated by $4,466,122
Expenditures under the Emergency Rental Assistance Program (ALN 21.023) were understated by $382,418
Expenditures under the COVID-19—Homeowner Assistance Fund Program (ALN 21.026) are overstated $403,795
Expenditures under the COVID-19—HOME Investment Partnerships Program, American Rescue Plan (ALN 14.239) are overstated $99,928
Cause: There was a breakdown in the Agency’s procedures related to preparation and review of the SEFA. The Agency’s procedures for preparing the SEFA did not account for classification of certain loans subject to continuing compliance requirements. The errors of $8,641,271 related to ALN 14.239 and $4,466,122 related to ALN 14.275 were caused by the Agency not properly identifying certain loans required to be included on the SEFA. The error of $382,418 related to ALN 21.023 was caused by the Agency reducing a subscription software disbursement by the portion of the disbursement related to payments on the subscription liability. The errors of $403,795 and $99,928 related to ALN 21.026 and ALN 14.239, respectively, were caused by the Agency charging certain direct and indirect costs from fiscal year 2021, 2022, and 2023 to the programs in fiscal year 2024.
Effect: The Agency adjusted its fiscal year 2024 SEFA by $13,489,811 for the errors related to ALN 14.239, 14.275, and 21.023. The expenditures for ALN 21.026 and 14.239 are overstated $403,795 and $99,928, respectively.
Questioned Costs: None
Context: The Agency’s expenditures of federal awards reported on the SEFA were understated by $13,489,811 which was corrected during the audit. The Agency’s expenditures of federal awards reported on the SEFA for ALN 21.026 and ALN 14.239 are overstated $403,795 and $99,928, respectively, which the Agency did not correct. Total expenditures reported on the SEFA, as adjusted for this matter, are $422,678,239.
Repeat Finding?: No
Recommendation: We recommend that the Agency review and strengthen its processes and controls over the preparation of the SEFA.
Views of responsible officials of the auditee: We agree with the above finding and our response is included in the corrective action plan.