Finding Text
Condition: The following conditions were found during audit testing of two ERA 2 quarterly reports:
1. DSHA procedures over the reporting did not include the documentation of the preparation and review of quarterly reports selected for testing.
2. Audit testing of a statistical sample of 15 cases processed during the year ended June 30, 2024, revealed an income calculation on a case which resulted in the incorrect calculation of Area Median Income (AMI) percentage. The AMI percentages calculated at the case level are utilized to support required demographic reporting.
3. Supporting documentation was not retained for information on the reports selected for testing.
4. A review of the reports selected for testing revealed the following:
a. The demographic information section of the ERA 2 report for the quarter ended December 30, 2023, was not completed.
b. Evidence could not be provided showing how administrative and housing stability service amounts expended and obligated were calculated.
A similar finding was noted during the audit of the year ended June 30, 2023. Refer to finding 2023-005.
Criteria: United States Department of the Treasury ERA Program Reporting Guidance version 3.2 was issued March 29, 2022, provides detailed reporting requirements.
2 CFR § 200.303 requires the implementation of effective internal controls:
“Internal controls requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.”
Questioned Costs: None
Effect: Reports required by the U.S. Treasury were not submitted timely, accurately, and supported by contemporaneously prepared documentation. Information required for the U.S. Treasury to calculate the required reallocations was not accurately reported on the quarterly reports submitted.
Cause: Internal controls over reporting were not appropriately designed, implemented, or operated. DSHA’s internal controls over the reporting process did not ensure information required information was captured.
Recommendation: We recommend DSHA enhance its policies and procedures for preparing and approving required reports prior to submission.