Finding Text
FINDING 2025‐001—ALLOWABLE COSTS/COST PRINCIPLES AND ACTIVITIES ALLOWED AND UNALLOWED AND SPECIAL TEST – DRAWDOWNS OF HOME/HOME ARP FUNDS—MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE FEDERAL PROGRAM: Home Investment Partnerships Program (HOME) ASSISTANCE LISTING NUMBER: 14.239 YEAR(S): 2025 FEDERAL AGENCY: Department Of Housing and Urban Development (HUD) PASS‐THROUGH AGENCIES: Idaho Housing and Finance Association Criteria - In accordance with 2 CFR 200.303 the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition/Context - On a periodic basis management submits draw-down requests to the pass-through agency. Management could not provide documentation to evidence that a review was performed over 100% of the draw-down requests prior to their submission. Further, during the testing of the underlying expenses, which are the primary inputs into the above-mentioned drawdown requests, management was able to evidence their review of payroll expenses via approved time sheets. However, non-payroll expenses and their associated indirect cost allocation calculations did not have evidence of management’s review for allowability. Cause - Management did not design and implement a control that required documented evidence of review and approval of the drawdown request. The control also did not ensure that the evidence of review of the underlying non-payroll expenses and indirect cost allocation calculations were retained. Effect - Management may not be able to detect and prevent unallowable expenses from being submitted to the passthrough agency for reimbursement, which could result in unallowed expenses being charged to the grant. Questioned Cost - Not Applicable Recommendation - Management should design and implement a control that ensures sufficient evidence of approval is obtained and retained, including underlying indirect cost allocation calculations and non-payroll costs. View of Responsible Officials - See Corrective Action Plan.