Finding Text
Criteria: HUD’s Continuum of Care program (ALN 14.267) requires recipients to provide and document matching contributions in accordance with 24 CFR § 578.73. Recipients must maintain adequate records to support the source and allowability of match contributions in accordance with 24 CFR § 578.103. In addition, in accordance with 2 CFR § 200.303, organizations are required to establish and maintain effective internal controls over compliance, including appropriate segregation of duties and review procedures, to ensure that match calculations and supporting documentation are accurate, complete, and properly supported. Conditions: Our testing of 2 Permanent Supportive Housing tenant files related to matching requirements identified that, in both instances, match calculations and supporting documentation were not reviewed and approved by an individual independent of the preparer. These results indicate that controls over the review and approval of match documentation are not operating effectively. Cause and Effect: This condition appears to be due to inadequate segregation of duties and the absence of a formalized independent review process over match calculations and supporting documentation. We identified a significant deficiency in internal control over compliance related to the matching requirement. The lack of independent review increases the risk that errors or noncompliance in match reporting could occur and not be detected in a timely manner. Although no questioned costs or instances of noncompliance were identified as a result of our testing, this control is considered important to ensuring ongoing compliance with program requirements. Recommendations: We recommend management strengthen controls over match reporting by enhancing segregation of duties and implementing an independent review process for match calculations and supporting documentation. Where full segregation of duties is not feasible, compensating controls—such as documented supervisory review by an individual not involved in preparation—should be implemented. Management should also establish formal procedures and standardized checklists to ensure match contributions are properly supported, reviewed, and approved prior to reporting. Periodic monitoring procedures should be performed to ensure continued compliance.