Finding Text
Finding Number: 2023-012 Prior Year Finding Number: 2022-004 Program: Emergency Rental Assistance (ERA) ALN: 21.023 Compliance Requirement: Reporting Criteria --- In accordance with 2 CFR §200.303, entities must establish and maintain internal controls to ensure compliance with Federal requirements. ERA reporting guidance requires timely submission of accurate and complete reports, adherence to administrative cost limitations, and proper classification of expenditures. Condition --- Testing of two quarterly ERA2 reports and the ERA1 final close-out report identified the following: • Lack of evidence of review by the Chief Financial Officer prior to submission • Reports submitted after the required deadline • Incomplete demographic data • Exceedance of administrative and housing stability cost thresholds • Insufficient supporting documentation for reported amounts Questioned Costs --- Not determinable Context --- The condition was identified through testing of selected quarterly and final reports. Effect --- Inadequate controls over reporting increase the risk of inaccurate or unsupported financial and performance data being submitted to the Federal awarding agency. Cause --- Management did not establish or maintain effective controls over the preparation, review, and approval of reports. Recommendation --- We recommend that management enhance internal controls over reporting, including formal review procedures, timely submission processes, and retention of supporting documentation. Views of Responsible Officials: Management acknowledges the findings and provides the following context regarding the delay in submission of the FY 2023 reporting package. During FY 2023, the Internal Control Memoranda used to guide and review program operations that contained information that changed during the fiscal year due to the restructuring of the ARP Division and the implementation of the Grant Administrator role. These organizational changes affected reporting lines and oversight responsibilities, but the Internal Control Memoranda were not updated in real time to fully reflect them. To help ensure timely submission of the quarterly compliance reports, the reporting process was updated to remove the multi-level review requirement. The reports are highly detailed and require significant compilation and reconciliation within a limited timeframe between the close of the reporting period and the submission deadline. Eliminating the multi-level review process allowed management to meet reporting deadlines more efficiently. Additionally, administrative expenses exceeding the 15% threshold were reviewed and approved by Treasury, as the overage was directly attributable to the recapturing of $16 million by Treasury prior to the ERA1 closeout. Furthermore, Housing Stability Services expenditure remained within the 10% threshold for ERA2. It is also important to note that the report is cumulative in nature, which allows for corrections or updates to be incorporated in subsequent quarterly submissions, thereby maintaining overall reporting accuracy over time. Additionally, copies of all submitted reports are provided to both the CFO and the Executive Director (ED) for review and oversight. Further strengthening financial oversight, the CFO requires all direct reports to submit monthly to bi-monthly financial reports. These reports are used to continuously monitor program performance, identify any discrepancies, and address issues in a timely manner. Management remains committed to strengthening internal controls and ensuring the timely and accurate submission of all required federal reporting.