Finding Text
Grant No(s): 1505-0266 Criteria: Louisiana Revised Statute §24:523 requires public agencies to report any misappropriation, theft, or loss of public funds or assets to the Louisiana Legislative Auditor’s Office (LLA) immediately upon discovery. Additionally, 2 CFR §200.113 mandates that non-federal entities disclose in writing any violations of federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the federal award. 2 CFR §200.331 and Treasury Emergency Rental Assistance (ERA) Program Guidance require that entities establish and maintain effective controls to ensure that assistance is provided only to eligible recipients. This includes verifying income, housing status, and risk of homelessness or housing instability. Condition: ERA personnel at Jefferson Parish identified instances of what appears to be externally caused fraudulent activity that occurred in 2022 that were found and reported to the Parish’s internal auditor, local law enforcement (Jefferson Parish Sheriff’s Office) and the Federal Bureau of Investigation (FBI). The misappropriation of public funds was not reported to the LLA and the Jefferson Parish District Attorney’s Office in a timely manner. In addition, the Parish was not insured over these types of misappropriations. See Attachment A for additional information required by the LLA regarding each instance of fraud. Universe/Population: The universe/population for Eligibility testing is 4,214 Participants receiving a total of $12,070,966 in assistance through rental and utility assistance in 2023. We selected 60 participants for testing of eligibility compliance requirements applicable to the program, noting no exceptions in our 2023 testing. Cause: In 2022, Jefferson Parish did not have adequate policies and procedures over the application and monitoring of eligibility requirements on all potential awardees of rental and utility assistance. The Parish’s internal controls did identify that the fraud occurred. Also, the Parish did not have adequate procedures in place to ensure that instances of fraud were reported to the LLA and the District Attorney’s Office timely. Effect: The failure to report the fraudulent activity and ensure proper eligibility review resulted in noncompliance with both state and federal requirements, delayed corrective actions, and increased the risk of continued misuse of federal funds. Questioned Costs: The questioned costs of $424,515 represent payments made in 2022 to ineligible recipients due to fraudulent activity. We did not have any exceptions in our eligibility testing for 2023. Identification of a repeat finding: This is not a repeat finding. Recommendation: Jefferson Parish should continue to monitor eligibility of award requirements and application of those requirements. View of Responsible Officials: With the support of a new leadership team, Jefferson Parish is committed to strengthening grants and financial management and enhancing the reliability of grants reporting. The Parish has engaged Deloitte & Touche LLP as a consultant to assist in establishing regular review practices, policies, procedures, and internal controls with the goal of improving audit readiness, refine documentation procedures, and strengthen internal controls to support accurate and complete financial data going forward. As part of this effort Jefferson Parish and Deloitte are working across Departments to re-define organizational structure, to establish governance and oversight between finance, accounting, and programmatic departments. Jefferson Parish and Deloitte are also working to implement data quality improvement measures, including the establishment of quarterly grants reconciliation and review processes. Jefferson Parish has also engaged Infor in the implementation of new financial and reporting technology to support improved financial processing and controls.