Finding 1132525 (2023-002)

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, 2023, we reviewed support for program expenditures and noted that certain support produced and submitted to the recipient were fraudulent. This issue was also identified and reported in the prior year as Finding 2022-002. 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 was not in compliance with program requirements for the year ended December 31, 2023. Questioned Costs: $43,212 Context: Of the $43,212 of federal expenditures relating to this program, $43,212 represented fraudulent expenditures. The cumulative amount of fraudulent expenditures relating to this program for the years ended December 31, 2023 and 2022 amounted to $69,882. Repeat Finding: This condition was previously reported as finding 2022-002, which has not been adequately addressed during 2023. Recommendation: Whisman, Giordano & Associates recommendation was to redefine the entire accounting and control system.