Finding Text
Condition: During our testing of 60 ERA2 transactions, we identified 14 instances (approximately 23%) in which delinquent or prospective rental assistance amounts were shifted forward by one month based on an informal and unwritten organizational practice intended to address processing timing delays. This practice was not consistently applied to similar transactions, and in all instances noted, there was insufficient documentation supporting the adjustment or evidence of review and approval. We consider this item to be a significant deficiency in internal control over compliance with the major program. Criteria: Uniform Guidance requires that costs must be adequately documented, consistent with policies and procedures, and accorded consistent treatment. Uniform Guidance requires financial and programmatic records sufficient to permit training of federal funds and to demonstrate compliance with federal statues, regulations, and the terms and conditions of the federal award. The Treasury ERA guidance further requires recipient to maintain documentation supporting assistance determinations and payments. Cause: The condition appears to result from a lack of a formal written policy governing the timing of assistance payments and the lack of controls to ensure consistent application and adequate documentation of adjustments for shift in the covered period of rental assistance. Effect: As a result, there is an increased risk that expenditures may not be recorded in the proper period or in accordance with Uniform Guidance requirements related to documentation and consistency, including compliance with the period of performance. Although the transactions tested were otherwise compliant with ERA2 eligibility requirements, the deficiencies reduce the Organization’s ability to demonstrate compliance and increase the risk of future noncompliance. Context: The issue was identified in 14 out of 60 transactions tested, representing a deviation rate of approximately 23%, and reflects both inconsistent application of an informal practice and lack of supporting documentation. Questioned Costs: None identified.Recommendation: We recommend that the Organization establish a formal written policy addressing the timing of rental assistance payments, require documentation and supervisory approval for any adjustments, and implement controls to ensure consistent application across transactions. Views of Responsible Official: Management concurs with the finding. The Organization utilized an informal practice toaddress processing timing differences for rental assistance payments; however, the practice was not formally documented and was not applied consistently. Management recognizes the need for written policies and adequate supporting documentation when adjustments are made affecting the timing of rental assistance payments and will review and revise its current policies and procedures to ensure appropriate documentation. Additionally, this federal funding program has come to an end.