Finding Text
Assistance Listing, Federal Agency, and Program Name - 14.267, U.S. Department of Housing and Urban Development, Continuum of Care Program
Federal Award Identification Number and Year - MI0429L5F012209, and MI0030L5F012215 (direct funded); 20230256-00, 20240559-00, MI0074L5F012114, and MI0074L5F012215 (pass-through funded)
Pass through Entity - Michigan Department of Health and Human Services, Neighborhood Service Organization, and Detroit Wayne Integrated Health Network
Finding Type - Material weakness
Repeat Finding - No
Criteria - Per 2 CFR 200.303(a), a non federal entity must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 - The Organization lacked sufficient controls to ensure consistent reviews/approvals of monthly reimbursement requests and tenant rent calculations throughout the year.
Questioned Costs - None
Identification of How Questioned Costs Were Computed - N/A
Context - The review and approval of the monthly reimbursement requests and the tenant calculation serve to prevent and detect and correct noncompliance specific to the following compliance categories: period of performance, earmarking, program income and rent reasonableness. Each grant requests reimbursement for expenses incurred on a monthly basis. The review of the monthly reimbursement request, including supporting documentation, verifies that the costs are within the period of performance, administrative costs did not exceed 10 percent, and use of program income is consistent with grant terms. The review of the tenant rental calculations, including tenant rent calculation worksheet, verifies that the amount charged to participants is calculated and charged appropriately and the associated program income is identified and tracked appropriately.
Based on the testing performed, the audit procedures identified that in 5 out of the 12 months there was not evidence of review for monthly reimbursement requests for one or more of the programs. Testing also identified that 4 out of a sample of 35 tenant rent calculations did not have evidence of review.
Cause and Effect - The controls in place to ensure period of performance, earmarking, program income, and rent reasonableness are reviewed for completeness and accuracy were not in place. The lack of controls could result in an instance of noncompliance not being identified.
Recommendation - We recommend the Organization ensure controls are in place to ensure the monthly reimbursement requests and the tenant rent calculations are reviewed for completeness and accuracy and for compliance with period of performance, earmarking, program income and rent reasonableness.
Views of Responsible Officials and Corrective Action Plan - Effective immediately, the accounting director or rent analyst will review and approve the monthly reimbursement requests and rent calculations.