Finding Text
ALLOWABLE ACTIVITIES AND ALLOWABLE COSTS - SIGNIFICANT DEFICIENCY
Federal Program
Emergency Rental Assistance ALN 21.023; passed through the County of Berks
Criteria
2 CFR Section 200.400 requires recipients and subrecipients of federal grant funds to maintain adequate documentation to support costs charged to a federal award.
FAQ #5 issued by the Department of Treasury related to this program indicates that Grantees must obtain, if available, a current lease, signed by the applicant and the landlord or sublessor, that identifies the unit where the applicant resides and establishes the rental payment amount. Additionally, FAQ #6 notes that all payments for utilities and home energy costs should be supported by a bill, invoice, or evidence of payment to the provider of the utility or home energy service.
Condition/Cause
During 2022 payments of rental and utility assistance were entered as batches within the financial accounting software. A separate spreadsheet was utilized to track individual payments included within the batches. The original spreadsheet provided contained data entry errors. After revising for corrections, the detail provided by the Authority outlining individual payments was $472,226 lower than expenses reported in the financial reporting software and could not be reconciled by management.
For 6 out of 60 cases tested, the amount paid for rent did not agree to a lease agreement or bills on file for the following reasons: (1) clerical errors, (2) duplicate payments due to multiple staff working on the same file, or (3) failure to request support before payment was made. The Authority did not have controls in place to detect the noncompliance prior to issuing payments.
Effect
The Authority is not in compliance with the 2 CFR Part 200 requirement to maintain adequate documentation to support costs charged to a federal program.
Questioned Costs
Known questioned costs are $475,094, which includes $472,226 for which expenditure details could not be provided and $2,868 of unallowable costs detected in our sample of cases.
Context
The Authority was unable to identify payments made for 1.95% of the population. Within our testing of 60 cases, questioned costs comprise approximately 0.59% of the total costs tested.
Repeat Finding
Yes. 2021-006.
Recommendation
We recommend the Authority revisit and strengthen internal controls over tracking individual payments for transactions entered as batches, particularly when related to federal awards. We encourage the Authority to continue working to identify the individual transactions making up the remainder of the federal expenditures under this program. We also recommend the Authority revisit and strengthen internal controls over allowable activities and allowable costs related to grant programs.
Management Response
See corrective action plan included in this report package.