Finding Text
United States Department of the Treasury
Reference Number: 2023-007
Program: 21.026 COVID-19 Homeowner Assistance Fund Program
Federal Award Number: HAF0034
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Cash Management; Program Income
Condition: During audit testing of the HAF program, we found the following instances of non-compliance. HAF funding received in June 2022 totaling $45 million was deposited into a non-interest-bearing demand account. In March 2023, $21 million was moved to an interest-bearing savings account. Fiscal year 2023 interest earnings of $88,777 on the HAF funds held by DSHA were recognized as program income. Interest earnings in excess of $500 were not annually remitted to the Department of Health and Human Services Payment Management System. Criteria: The HAF program operates in accordance with the requirements of 2 CFR 200.305(b) which requires the following: (8) The non-Federal entity must maintain advance payments of Federal awards in interest-bearing accounts… (9) Interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either Automated Clearing House (ACH) network or a Fedwire Funds Service payment. Questioned Costs: $88,777. Interest income on HAF program funds was initially recorded as program income until it was corrected by an adjusting journal entry. During the audit of the year ended June 30, 2023, interest income was reduced by an audit adjusting journal entry. Effect: HAF program funds were held in a non-interest-bearing account during the period of July 2022 through March 2023. Interest income on HAF program was not timely remitted to the Department of Health and Human Services as required by the federal regulations. Cause: DSHA’s internal controls did not identify HAF program compliance requirements in time to prevent the Conditions noted. Recommendation: We recommend DSHA review the design and implementation of internal controls to address the identified weaknesses in internal control.