Finding Text
United States Department of the Treasury
Reference Number: 2023-005
Program: 21.023 COVID-19 Emergency Rental Assistance
Federal Award Number: ERA-2101123208 & ERAE0280
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Reporting; Special Tests and Provisions
Condition: The following conditions were found during audit testing of one ERA1 quarterly report and two
ERA2 quarterly reports: 1. DSHA procedures over the reporting did not include the documentation of the preparation and review of quarterly reports selected for testing. 2. The following reports required by the U.S. Treasury were either not submitted timely, or evidence of their submission date was not available: Grant: ERA1, Reporting Quarter: Friday September 30, 2022, Due Date: Wednesday, November 16,2022, Date Submitted: Not Documented. Grant: ERA2, Reporting Quarter: Friday September 30, 2022, Due Date: Friday, December 16,2022, Date Submitted: Not Documented. Grant: ERA2, Reporting Quarter: Friday March 31, 2023, Due Date: Wednesday, May 17,2023, Date Submitted: Wednesday, May 23. 3. Audit testing of a statistical sample of 40 cases processed during the year ended June 30, 2023, revealed that Area Median Income (AMI) percentage was not calculated correctly for two cases. The AMI percentages calculated at the case level are utilized to support required demographic reporting. 4. Supporting documentation was not retained for information on the reports selected for testing. A review of the reports selected for testing revealed the following: a. The demographic information section of the ERA2 report for the quarter ended March 31, 2023, was not completed. b. The ERA2 report for the quarter ended September 30, 2022, reported administrative expenditures as $7,770,634 which was the amount of ERA award funds approved for participant households. Audit procedures determined that administrative expenditures for the quarter ended September 30, 2022, were approximately $123,000. c. The ERA1 and ERA2 reports for the quarter ended September 30, 2022, report the same amounts expended and obligated, except for the input error noted above. A similar finding was noted during the audit of the year ended June 30, 2022. Refer to finding 2022-008. Criteria: United States Department of the Treasury ERA Program Reporting Guidance version 3.2 was issued March 29, 2022, and provides quarterly reporting deadlines as detailed in the condition. 2 CFR § 200.303 requires the implementation of effective internal controls: “Internal controls requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.” Questioned Costs: None Effect: Reports required by the U.S. Treasury were not submitted timely, accurately, and with contemporaneously prepared supporting documentation. Information necessary for the U.S. Treasury to calculate the required reallocations was not accurately reported on the quarterly reports submitted. Cause: Internal controls over reporting were not appropriately designed, implemented, or operated. DSHA’s internal controls did not capture and report amounts obligated for the operation of the ERA program. The report preparation process utilized reports generated from one application processing system, without taking into account payments processed outside of that system. Recommendation: We recommend DSHA enhance its policies and procedures for preparing and approving required reports prior to submission.