Finding Text
Department of Housing and Urban Development
Continuum of Care, Federal Financial Assistance Listing 14.267, Affects all grant awards included under Federal Financial Assistance Listing 14.267 on the Schedule
Special Tests and Provisions
Significant Deficiency in Internal Control Over Compliance
Criteria: When grant funds are used by Catholic Charities to pay for rent, Catholic Charities must ensure that the rents do not exceed rents currently being charged by the same owner for comparable unassisted units and the portion of grant funds may not exceed HUD-determined fair market rents. These calculations should be reviewed prior to the rent being paid.
Condition: During our testing, we identified 4 instances where the participant’s file either did not have documentation that the rent reasonableness test was reviewed, or the documentation regarding the rent reasonableness test was incomplete or inaccurate.
Cause: Catholic Charities’ internal controls did not operate as designed, which resulted in incomplete/inaccurate rent reasonableness documentation and lack of review before the rent was paid.
Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program.
Questioned Costs: None reported.
Context/Sampling: A nonstatistical sample of 38 tenants were selected out of 100 tenants receiving rent payments from federal funds which made up $30,332 of $646,182 federal awards.
Repeat Finding from Prior Years: Yes, 2023-003
Recommendation: We recommend management revise their internal control procedures with applicable employees to make sure that all rent reasonableness tests are performed and reviewed by the appropriate personnel prior to the rent being paid.
Views of Responsible Officials: Management is in agreement with this finding.