Finding Text
Finding: 2024-006 Voided Rental Payments. Federal Programs - Continuum of Care. Federal Financial Assistance Listing - 14.267. Federal Award Numbers - OK0024L6I021111, OK0024L6I022113, OK0024L6I022212, OK0024L6I022213, OK0024L6I022214, OK0024L6I022215, OK0024L6I022316. Federal Agency - Department of Housing and Urban Development. Pass-through Entities - City of Oklahoma City and the City of Norman. Allowable Activities or Unallowed, Allowable Costs/Cost Principles. Significant deficiency in Internal Control over Compliance. Criteria: Uniform Guidance (2 CFR 200.302(b) ) requires recipients and subrecipients to maintain financial management systems that provide accurate, current, and complete disclosure of financial results. In addition, 2 CFR 200.403 requires costs charged to federal awards to be allowable and adequately supported. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Hope received reimbursement for rental expenditures that were later voided due to tenants no longer being current residents. Cause: Management did not maintain controls to ensure that expenditures claimed for reimbursement were supported by actual costs incurred. Backdated and adjusting entries were recorded without reconciliation to underlying expense documentation or budget tracking schedules and ultimately claimed to the granting pass-through agency. Effect or Potential Effect: Expenditures claimed for reimbursement exceed actual expenditures incurred. As a result, a portion of grant expenditures recorded is unsupported and may be unallowable. Questioned Costs: 1,305 questioned and 9,675 of likely questioned costs. Context: A nonstatistical sampling of 54 out of over 3,000 transactions were selected for testing of Activities Allowed and Unallowed, and Allowable Costs/Cost Principles. Two transactions totaling 1,305 were selected for testing that were voided after invoicing. The expenditure detail included 9,675 of other expenditures with the description "voided." Repeat Finding from Prior Year: No. Recommendation: Management may consider a subsequent review or an additional review when adjusting and removing costs after drawdowns to ensure any claimed expenses that subsequently become voided are adjusted in future drawdowns. Views of Responsible Officials: Management's response is included in the corrective action plan.