Benton County January 1, 2023 through December 31, 2023 2023-002 The County did not have adequate internal controls and did not comply with eligibility requirements. Assistance Listing Number and Title: 21.023 – COVID – 19 Emergency Rental Assistance Program Federal Grantor Name: U.S Department of Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4618C-102 Known Questioned Cost Amount: $5,669 Prior Year Audit Finding: N/A Background Congress passed the American Rescue Plan Act of 2021 which provided $21.6 billion in additional funding for Emergency Rental Assistance (ERA) programs. These funds were provided directly states, U.S. territories, local governments and Indian tribes to assist eligible households through existing or newly created rental assistance programs. The purpose of the ERA program is to provide direct payments to eligible entities that award financial assistance to eligible households as well as provide housing stability services. ERA grantees may provide assistance to eligible households directly or to landlords and utility providers on behalf of eligible households. During fiscal year 2023, the County received an award from the Department of Commerce to provide financial assistance to eligible households, including payment of rent, utilities and other housing stability services. During fiscal year 2023, the County spent $2,909,316 of this award. Federal regulations require recipients to establish, document and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. To comply with eligibility requirements, the County must calculate the maximum rent payment. Payments can be up to 150% of Fair Market Rent (FMR) and must be less than total amount due. In cases where the household does not have source documentation of the rental payment amount and relies on a written self-declaration from the household, the monthly maximum amount of assistance must be 100% of the greater of the FMR or the Small Area Fair Market Rent for the area in which an applicant resides. Description of Condition Our audit found that the County’s internal controls were inadequate for ensuring applicants who were eligible for rental assistance received the proper amount of financial assistance. Specifically, the County used the 150% rate instead of 100% rate when calculating the maximum rent payment for applicants who self-declared income. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The County was not aware that program requirements only allow applicants to receive benefits of 100% of the FMR when applicants provide a self-declaration of income instead of 150% of the FMR. Effect of Condition and Questioned Costs We used statistical sampling to select and test 28 applicants out of a total population of 409 applicants. In our sample, three applicants provided a self-declaration of income and received 150% of the FMR, but should have only received 100% of the FMR. As a result, the County overcharged the grant by $5,670. Based on the projection of our sample, we identified an additional $82,811 in estimated overpayments. Recommendation We recommend the County strengthen its internal controls to ensure it properly reviews all applicants receiving federal funds to ensure recipients receive only amounts for which they are eligible. County’s Response Benton County acknowledges the audit finding related to the Emergency Rental Assistance (ERA) program and agrees that a control deficiency resulted in certain payments exceeding allowable limits. This condition occurred during a period of rapidly evolving program requirements. As a result, prior guidance allowing up to 150% of Fair Market Rent (FMR) was applied in instances where applicants self-certified income, when the requirement should have been limited to 100% of FMR. Upon identification of this issue, the County reviewed applicable guidance, confirmed the correct requirements, and assessed impacted cases. Auditor’s Remarks We thank the County for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action take during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. 2023 Office of Management and Budget 2 CFR Part 200, Appendix XI Compliance Supplement: Self-attestation Alone – In order to provide assistance rapidly during the public health emergency related to COVID-19, the grantee may rely on a self-attestation of household income, financial hardship, and/or risk of homelessness and housing instability without further verification if the applicant confirms in their application or other document that they are unable to provide documentation, provided the other requirements detailed in Treasury guidance are satisfied. If an applicant is able to provide satisfactory evidence of residence but is unable to present adequate documentation of the amount of the rental obligation, grantees may accept a written attestation from the applicant to support the payment of assistance up to a monthly maximum of 100 percent of the greater of the Fair Market Rent or the Small Area Fair Market Rent for the area in which the applicant resides, as most recently determined by HUD and made available at https://www.huduser.gov/portal/datasets/fmr.html;