Finding Text
Finding 2025-002 – Material Weakness in Internal Controls Over Allowable Costs and Non- Compliance Identification of Federal Program: AL Number: 14.247 Self-Help Homeownership Opportunity Program (SHOP) Condition – A material amount of funding for the program was initially used for an unallowable activity. Funding for construction was used for down payment assistance. It was also noted that the program requires a separate bank account for the funds, yet the funds were not segregated. Criteria – Per Subpart E, Cost Principles, 2 CFR section 200, it is the grantee’s responsibility to understand the purpose of funding received, and other program requirements. Context and Cause – The Organization experienced turnover at the executive level. Management did not communicate with the funder in order to gain an understanding of allowable costs, and other program requirements. The organization subsequently met with the funder and re-submitted allowable invoices for the federal funding. Effect of Condition – The Organization was out of compliance until the costs were re-allocated. The Organization will need to open a separate account for the SHOP funds. Questioned Cost – None. Recommendation – The Organization should communicate with funders in order to understand the purpose of the funding and other program requirements, and develop an internal control system that ensures only allowable costs are charged to the grants. Views of Responsible Officials and Planned Corrective Actions – Management concurs with the finding and has developed a corrective action plan. We understand a material weakness is identified in the internal controls over allowable costs. Management will implement a procedure to ensure more frequent contact with funding sources regarding the purpose of funding and other program requirements.