Finding 1155621 (2024-001)

Federal program: FAL 21.027, Coronavirus State and Local Fiscal Recovery Funds Federal Grantor: U.S. Department of the Treasury Passed-through: Agency of Commerce and Community Development Significant deficiency Criteria: Management is responsible for designing, implementing, and maintaining effective internal controls to ensure accurate financial reporting and safeguard assets. Downstreet’s internal control procedures require the Vermont Housing Improvement Program (VHIP) expenditure tracking spreadsheets to be updated and reviewed prior to disbursements of VHIP grant funds to grant awardees. Condition: During testing of the VHIP grant fund disbursement process, the auditor found that the control designed to ensure all payments were supported by adequate documentation was not operating effectively. Cause: Controls over cash disbursements were not operating effectively. Context: An initial sample revealed multiple expenditure tracking spreadsheets that were incomplete. As a result, the auditor discontinued control testing and performed extended substantive testing on the disbursements of VHIP grant funds. Effect: Unallowable costs could be paid by the Organization. Recommendation: We recommend Downstreet Housing and Community Development, Inc. improve controls over disbursements to grant awardees. Views of responsible officials: Management acknowledges the finding. Certain VHIP disbursements were made prior to receipt of invoices and some tracking spreadsheets were incomplete at closeout. These issues occurred during a period of unexpected staffing shortages. We agree with the recommendation and have strengthened controls accordingly.