Finding Text
United States Department of the Treasury
Reference Number: 2023-004
Program: 21.023 COVID-19 Emergency Rental Assistance
Federal Award Number: ERA-2101123208 and ERAE0280
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Eligibility
Condition: Audit testing of a statistical sample of 40 cases processed during the year ended June 30, 2023, revealed the following: Two cases where the applicant received assistance in excess of the allowable maximum assistance, resulting in overpayments totaling $7,090. Four cases (including the two referenced previously) where ERA 1 was charged more than the allowable maximum assistance. The overpayments resulted from errors in applying statutorily established limits for rental assistance. These overpayments were subsequently moved to ERA 2 as described in the Context section. A similar finding was noted during the audit of the year ended June 30, 2022. Refer to Finding 2022-006. Context: During the year ended June 30, 2023, DSHA approved and disbursed assistance for 12,948 cases totaling $49,154,163. During the year ended June 30, 2023, DSHA undertook extensive analysis of ERA assistance payments. DSHA determined the following: Assistance in excess of 15 months totaling approximately $948,000 was charged to ERA 1. The related cases were disclosed to the United States Department of the Treasury and the assistance was reclassified to ERA 2. Certain assistance in excess of 18 months totaling approximately $1,070,000 was paid. This amount was not reported as an allowable cost nor was it reported on the June 30, 2023 Schedule of Expenditures of Federal Awards. The related cases were disclosed to the United States Department of the Treasury. Criteria: The following summarizes the applicable portions of the ERA program requirements: United States Department of the Treasury Program FAQs updated July 6, 2022: ERA1 allows an eligible household to receive up to 12 months of assistance (plus an additional three (3) months, if necessary, to ensure housing stability for the household, subject to the availability of funds). ERA2 allows an eligible household to receive up to 15 months of assistance (plus an additional three (3) months, if necessary, to ensure housing stability for the household, subject to the availability of funds). Grantees must establish policies and procedures to govern the implementation of their ERA programs consistent with the statutes and the ERA program requirements. Questioned Costs: $7,090 of assistance overpayments. Effect: Federal program expenditures of rental assistance were overpaid. Cause: Internal controls over compliance were not appropriately designed, implemented, or operated to appropriately address the risk of noncompliance with the federal program requirements. Data migrated from DSHA’s previous program administration software does not correctly display in the current program administration software contributing to payment errors. Recommendation: We recommend DSHA enhance its policies and procedures for processing rental assistance applications to ensure compliance with the federal program’s requirements.