Finding Text
#2024-001 – Major Federal Award Finding – Eligibility and Significant Deficiency in Internal Controls over Compliance
This is a repeat of prior year finding #2023-001.
Criteria: To be eligible to receive assistance under this program, an individual must meet the definition of “homeless,” under 24 CFR section 578.3.
Condition: The Corporation has two housing projects that received Continuum of Care funding for initial construction or rehabilitation. The respective grant agreements contain ongoing compliance requirements for a 20 year period. The grant agreement, by reference, incorporates the original grant application.
During the year ended December 31, 2024, the sample of units selected for testing did contain evidence in the tenant file of prior homelessness. However the Corporation was unable to provide evidence that each Project was serving the required number of units occupied by individuals meeting the definition of “homeless”. The grant agreements for the Projects with Continuum of Care funding do not provide an indication of the number of units required to house “homeless” individuals.
Effect: The effect of the above condition could result in disciplinary action as determined by HUD, including possible repayment of a portion of the continuing compliance grants.
Cause: The Continuum of Care grant agreements do not provide guidance on the number of units required to be “homeless” at each project under the definition provided by 24 CFR section 578.3. Each Project is within the last 5 years of the compliance period, and the Corporation is unable to locate the original grant application which may indicate the number of units required to serve “homeless”. The grant agreements specifically incorporate the application by reference. In addition the Corporation made several contacts to HUD. The personnel at HUD were not able to specifically answer the inquiries regarding the number of units required to serve “homeless” under the initial construction or rehabilitation grant agreements.
Recommendation: Management should continue to work with HUD personnel to determine the continuing compliance requirements of the Continuum of Care funding received for initial construction or rehabilitation. Upon resolution of the requirements, management should ensure that each project with continuing compliance requirements under the Continuum of Care program has the required amount of units filled by “homeless” individuals as defined by 24 CFR section 578.3. A system to monitor the required amount of units should be established by management and implemented to ensure compliance with the requirements.
Questioned Costs: Unable to determine questioned costs, if any, due to the inability to determine the required amount of units that must serve the “homeless” for the year ended December 31, 2024.
Views of Responsible Officials: The Corporation agrees with the recommendations put forth by the auditors. The Corporation has contacted the local Continuum of Care and regional U.S. Department of Housing and Urban Development (HUD) office in an effort to address the finding and will continue to work with HUD personnel to determine the continuing compliance requirements of the Continuum of Care funding received for projects. See also attached Corrective Action Plan.