Finding Text
2025-007: Internal Control Documentation Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Section 8 Choice Housing Vouchers Assistance Listing Number: 14.871 Federal Award Identification Number and Year: CA103VO, CA103AF, CA103 AFR; 2024 and 2025 Award Period: July 1, 2024 – June 30, 2025 Compliance Requirements Affected: E. Eligibility, L-Reporting, and N-Special Tests and Provisions Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2CFR § 200.303 Internal controls require a recipient of federal awards to: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Evidence of the Housing Manager’s review and approval of certain internal control processes and the timing of those reviews was not clearly documented. Questioned Costs: None noted. Context: 40 tenant files were selected to test for various compliance requirements. While the tenant files contained sufficient evidence that the City was in compliance with grant requirements, documentation of the review and approval process for HUD Form 50058, rent reasonableness calculations, and the Housing Authority application (with underlying applicant information) prior to approval of the applicant was not clearly documented. Cause: The City's applicant examination process includes a step where the Housing Manager reviews tenant files prepared by the Housing Specialists. However, the City was unable to provide documentation evidencing the Housing Manager’s review and approval process. Effect: Breakdowns in internal control over compliance may lead to ineligible applicants receiving inaccurate benefits. Repeat Finding: Yes; 2024-009 Recommendation: We recommend the City establish procedures to ensure that the review and approval processes are clearly documented within each tenant file. Views of Responsible Officials and Corrective Action: Management agrees with this finding. This finding, which also was identified in prior-year (2023-2024), is disruption in adequate documentation and monitoring of the corrective procedures. Supporting documentation evidencing the review and approval of certain internal control processes, including the timing of those reviews, was not found. Management recognizes the importance of maintaining adequate documentation to demonstrate the required reviews and approvals are performed timely and consistently at all times. The RBHA established procedures to monitor and ensure proper file review in the prior-year (2023-2024) corrective action by creating a new checklist for a supervising team member to review intake files for accuracy, to document approval, release the Housing Assistance Payments, and maintain a record of the signed checklist in the participant file. To prevent recurrence, new staff will be informed of this requirement.