Finding 1100119 (2022-002)

Information on the Federal Program: Assistance Listing Number 14.218 – Community Development Block Grants/ Entitlement Grants, U.S. Department of Housing and Urban Development (HUD). Pass-Through Entity: City of Dover, Delaware. Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting. Type of Finding: Material Noncompliance. Criteria: Program requirements state that a grantee may use funds only for those activities carried out to prevent, prepare for, and respond to coronavirus. Condition: For the year ended December 31, 2022, we reviewed support for program expenditures and noted that certain support produced and submitted to the recipient were fraudulent. Cause: A breakdown in internal controls, further discussed in Note M to the financial statements enabled the fraudulent misappropriation of program funds. Effect or Potential Effect: As a result, the Organization is not in compliance with program requirements for the year ended December 31, 2022. Questioned Costs: $26,670 Context: Of the $54,087 of federal expenditures relating to this program, $26,670 represented fraudulent expenditures. Recommendation: Whisman, Giordano & Associates recommendation is to redefine the entire accounting and control system.