Finding Text
Finding 2023-001 – Allowable Costs and Activities – Compliance and Control Finding
Federal Award. No. 14.231 Emergency Solutions Grant Program – COVID 19
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Entity: Missouri Department of Social Services
Criteria Or Specific Requirement: 2 CFR sections 200.400 through 200.401 provide the general provisions
for cost principles. Section 200.400(b) states that the non-Federal entity assumes responsibility of administering
Federal funds in a manner consistent with underlying agreements, program objectives and the terms and
conditions of the Federal award.
Condition: In our nonstatistical sample of 40 transactions, we noted no exceptions as a result of our testing.
However, during the current fiscal year, management of the Commission identified certain questionable rental
assistance payments. Certain payments have been reported to the appropriate agencies in accordance with
regulatory requirements.
Cause: The significant amount of Federal dollars awarded, the short period of time required to make awards
available and the presence of new requirements for the program were burdensome for management to disburse
in compliance with Federal guidelines. Compared to the Commission’s other Federal programs, the program
involves a very large number of applications and a high volume of transactions resulting in exposure to error
and irregularity.
Effect: Instances of known and suspected noncompliance were identified by the Commission.
Questioned Costs: The Commission has identified $320,658 of known questioned costs in fiscal year 2023.
Context: Approximately 1,300 vendors are set up in the Commission’s system for application of emergency
rental assistance. Of the vendors with applications approved for funding, 134 are considered to be known
noncompliance for a total amount of known questioned costs of $2,112,621 since fiscal year 2021. After the
identification of the first instance of noncompliance, the Commission adjusted and enhanced its procedures for
evaluating current and existing applications. As the Commission reviews future applications following their
updated policies and procedures, additional vendors could be flagged to investigate prior payments for potential
ineligible costs.
Identification As A Repeat Finding: Repeat of Finding No. 2022-001.
Recommendation: We recommend that management continue to apply resources devoted to mitigating and
preventing further exposure to noncompliance. Additionally, we recommend the Commission continue to provide
additional training to employees as well as third parties responsible for reviewing and approving applications.
Internal controls over allowable costs and activities should ensure procedural improvements are implemented
properly.
Views Of Responsible Officials: See Management’s review and Corrective Action Plan included at the end of
the report.
Anticipated Completion Date: The Commission implemented additional compliance review procedures
during fiscal years 2021 and 2022, reviewed applications to identify potentially fraudulent applications during
fiscal years 2022 and 2023 and expects to conclude its investigation of identified cases during fiscal year 2024.
Contact Person: Steve Whitson, Director of Community Programs