Finding Text
AL number: 14.231, AL title: Emergency Solutions Grant Program Federal award identification number and year: LAHSA agreements: GT-BH-ABH-021, GT-BH-RTV-001, GT-BH-RTV-002, GT-BH-RTV-003, GT-BH-RTV-004, GT-BH-RTV-009, GT-TLS-N-013, GTRRH- RR-02, GT-CH-WS-001, GT-1878-2102-001 Name of federal agency: U.S. Department of Housing and Urban Development Name of pass-through entity: Los Angeles Homeless Services Authority Repeat finding: No Criteria: Per 2 CFR §200.403, allowable costs must be "necessary, reasonable, and adequately documented." Additionally, 2 CFR §200.302(b)(3) requires non- Federal entities to maintain records that sufficiently detail financial transactions to support Federal expenditures. Condition: During our testing of 40 payments charged to Federal grants, we noted that 9 payments (22.5%) lacked evidence of invoice review and approval before payment. Federal regulations require that expenditures charged to Federal awards be properly reviewed, approved, and documented to ensure allowability and compliance with grant terms. Cause: The lack of documentation appears to be due to inadequate enforcement of the Organization’s invoice approval process, which may stem from insufficient training, oversight, or procedural weaknesses. Questioned cost: N/A Recommendation: We recommend that management: - Reinforce policies requiring documented approval of invoices before payment. - Conduct training for staff responsible for invoice processing to ensure awareness of Federal documentation requirements. - Implement regular monitoring to ensure compliance with invoice review procedures. Views of responsible officials: Management acknowledges this finding and agrees that during the period under audit—while the organization was experiencing rapid growth and increased program activity—our documentation and approval processes did not consistently keep pace with operational demands. Since that time, we have taken significant steps to strengthen accounting procedures and internal controls, reinforce our invoice approval policies, and ensure all expenditures charged to Federal awards are properly reviewed and authorized prior to processing. We have enhanced our Accounts Payable workflow by implementing standardized process approval requirements, added additional leadership staffing and oversight within the Finance and Accounting team and provided targeted training to all personnel involved in invoice processing to ensure understanding of Federal cost principles and documentation standards. These corrective actions have improved our control environment since the audit period, and management is committed to continuing to develop and maintain strong financial controls and to prevent recurrence of this issue.