Finding Text
2023-005 Compliance and Internal Controls over Program Income (Significant Deficiency) U.S. Department of Housing and Urban Development 14.267 – Continuum of Care Program 2023 Funding Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 24 CFR Section 578.57, recipients or subrecipients must examine a program participant's income initially, and at least annually thereafter, to determine the amount of the contribution toward rent payable by the program participant. Condition: While the entity has adopted controls over compliance related to program income, these controls have not been consistently implemented during the year. Additionally for a sample of files selected for scattered locations, no evidence of income calculations to support program income was available within the participant’s files. Cause: Turnover / inadequate staffing in the Organization throughout the year and absence of a senior financial management position resulted in these controls not being consistently implemented. Effect: Without internal controls operating effectively, it is possible that the Organization would be at risk to be out of compliance with the compliance requirements. The Organization cannot effectively manage its federal program with controls that do not operate effectively. Questioned Costs: Undeterminable Perspective: No observable evidence of controls being implemented consistently on the above compliance requirement. Additionally, for 5 of the 7 files selected for scattered locations, no evidence of income calculations to support program income was available within the participant’s files. Repeat Finding: Yes Recommendation: The Organization should establish procedures to ensure that controls related to program income are consistently implemented. In addition, documentation should be included in each participant's files to support income calculations and the participant's share of rent payable to the program. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.