Finding Text
Criteria: HUD’s Continuum of Care program (ALN 14.267) requires that participant eligibility determinations, including income calculations and rent reasonableness assessments, be accurate, properly supported, and in compliance with program requirements. These determinations should be subject to appropriate internal control procedures, including review controls, to ensure accuracy and reduce the risk of error or conflict of interest. In accordance with 2 CFR § 200.303, organizations must establish and maintain effective internal controls over compliance, including segregation of duties and ongoing monitoring activities. Additionally, 24CFR § 578.103 requires recipients to maintain sufficient documentation to support eligibility determinations and related compliance requirements. Conditions: In a nonstatistical sample of 18 tenant files tested, there was no evidence of documented supervisory review of eligibility determinations, income calculations, or supporting documentation. These results indicate that controls designed to ensure completeness and accuracy of eligibility determinations are not operating effectively. Cause and Effect: This condition appears to be due to the absence of a formalized policy or consistent practice requiring documented supervisory review of eligibility determinations. We identified a significant deficiency in internal control over compliance related to this process. Although eligibility determinations were generally appropriate based on testing, the lack of documented review indicates that a key control is not operating effectively. This increases the risk that errors or noncompliance could occur and not be detected in a timely manner. No questioned costs were identified as a result of this condition. Recommendations: We recommend management strengthen controls over eligibility determinations by requiring documented supervisory review of all initial eligibility decisions and periodic file reviews. This review should be evidenced by a formal sign-off (electronic or manual) and include verification of key eligibility criteria. Management may also consider implementing a standardized review checklist to ensure consistency and completeness of the review process.