Finding 1094374 (2024-005)

Department of Housing and Urban Development Federal Financial Assistance Listing #14.128 Section 242 – Mortgage Insurance - Hospitals Special Tests and Provisions Material Weakness in Internal Control Over Compliance Criteria: The OMB Compliance Supplement requires that non-federal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: During our testing, there was no documentation of review and approval of disbursements for a portion of the sample selected. Cause: The Organization did not have an adequate internal control policy in place to ensure review and approval of cash disbursements was documented. Effect: The lack of adequate policies governing cash disbursement increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context: A nonstatistical sample of 60 expenditures were selected for testing. Of the 60 in the sample, 15 did not show evidence of proper review and approval prior to payment. Repeat Finding from Prior Year: No. Recommendation: We recommend that the Organization enhance internal control policies to ensure all cash disbursements are reviewed and approved prior to payment to ensure that all payments are necessary and correct. Views of Responsible Officials: Management agrees with the finding.