Finding Text
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Pass-Through Agency: City of Spokane Pass-Through Number(s): OPR 2024-1137 Award Period: August 1, 2024 – July 31, 2026 Type of Finding: Material Weakness in Internal Control Over Compliance – Eligibility and Special Tests and Provisions Material Noncompliance (Modified Opinion) Criteria or specific requirement: Uniform Guidance (2 CFR §200.303) requires nonfederal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. HUD Continuum of Care program requirements further require that participant eligibility, intake, exit, and other program-specific documentation be complete and maintained prior to the provision of rental assistance or supportive services. Condition: Catholic Charities of Spokane identified that HUD Continuum of Care funds were expended for rental assistance and supportive services in instances where required participant intake, exit, and other program-specific documentation was incomplete or missing at the time assistance was provided. These deficiencies resulted in charges to the grant that did not fully comply with program documentation and eligibility requirements. Management’s internal audit identified 26 participant files with documentation deficiencies attributable to a single employee. The associated questioned costs totaled $186,238 for the Continuum of Care program. Although services were provided to participants and costs were incurred for allowable purposes, the lack of required documentation constitutes noncompliance with program requirements. Questioned costs: $186,238 Context: Catholic Charities of Spokane administers HUD Continuum of Care funding to provide rental assistance and supportive services to eligible program participants. Program requirements mandate that participant eligibility, intake, exit, and other program-specific documentation be completed and retained prior to the provision of assistance and prior to charging costs to the federal award. During the audit period, management conducted an internal review of participant files and identified documentation deficiencies related to these requirements. The issue was self-identified by management and determined to be isolated to a single employee. Management quantified the impact of the deficiencies and communicated the matter to both the grantor and the auditors. Cause: The documentation deficiencies resulted from inadequate execution of established procedures by a single employee, combined with insufficient supervisory review and monitoring to ensure required documentation was completed prior to the release of assistance. Effect: The failure to maintain required documentation resulted in material questioned costs under the Continuum of Care program and represents a material noncompliance with federal program requirements. Additionally, the absence of effective controls to prevent or detect these deficiencies on a timely basis constitutes a material weakness in internal control over compliance, as it resulted in noncompliance that was material to the program. Repeat finding: Not a repeat finding. Recommendation: Catholic Charities of Spokane should continue to strengthen internal controls over compliance to ensure that all required eligibility, intake, exit, and program-specific documentation is completed and reviewed prior to providing assistance and charging costs to federal awards. This should include enhanced supervisory review, documentation checklists, and ongoing monitoring to ensure compliance with HUD requirements. Views of responsible officials: There is no disagreement with the audit finding.