Finding Text
Department of Housing and Urban Development Continuum of Care, Federal Financial Assistance Listing 14.267, Federal awards MN0238L5K002209, MN0238L5K002310, MN0448L5K002203, MN0448L5K002304, MN0457L5K012203, MN0457L5K012304, MN0449L5K002201, and MN0449L5K002302 included under Federal Financial Assistance Listing 14.267 on the Schedule Special Tests and Provisions Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. When grant funds are used by Catholic Charities to pay for rent, Catholic Charities must ensure that the rents do not exceed rents currently being charged by the same owner for comparable unassisted units and the portion of grant funds may not exceed HUD-determined fair market rents. These calculations should be reviewed prior to the rent being paid. Condition: During our testing, we identified eight instances where the participant’s file had incomplete or inaccurate documentation of review and approval for the rent reasonableness test. Cause: Catholic Charities’ internal controls did not operate as designed, which resulted in rent reasonableness tests not being reviewed before the rent was paid. Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 10 tenants were selected out of 56 tenants for rent reasonableness testing. Repeat Finding from Prior Years: Yes, 2024-001 Recommendation: We recommend management revise their internal control procedures with applicable employees to make sure that all rent reasonableness tests are performed and reviewed by the appropriate personnel prior to the rent being paid. Views of Responsible Officials: Management is in agreement with this finding.