Finding 1136537 (2024-001)

Inability to provide sufficient supporting documentation of internal controls over certain compliance requirements related to the federal program. Criteria: According to Uniform Guidance (2 CFR § 200.303a), both recipients and subrecipients of federal funding are required to establish, document, and maintain effective internal controls over federal awards. Condition: The Organization lacks a consistent and timely system for documenting internal controls over certain compliance requirements of the federal program. Cause: The federal program was new to the Organization during the year and, as the subrecipient of the federal award, management and program staff relied on the pass-through entity's internal controls and monitoring over compliance. As a result, at the subrecipient level, the Organization failed to consistently document internal controls over certain compliance requirements. Effect: The Organization provided short-term financial assistance for rent to various clients in the year under audit. For multiple payments, the Organization was unable to provide documentation of its internal controls over compliance as it relates to the U.S. Department of Housing and Urban Development's rent reasonableness standard (24 CFR 982.507). Recommendation: We recommend that the Organization formally obtain and retain documentation of internal control procedures over compliance requirements for federal programs it administers. Specifically, the Organization should obtain and retain sufficient documentation to demonstrate compliance with the U.S. Department of Housing and Urban Development's rent reasonableness standard. Additionally, program staff should be trained on these procedures and a periodic internal review process should be implemented to confirm that documentation meets all Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the material weakness and related reommendation and will incorporate the aforementioned recommendation into the federal program internal control processes.