Finding Text
Finding Number: 2022-003
Prior Year Finding Number: N/A
Compliance Requirement: Eligibility
Program: U.S. Department of the Treasury Emergency Rental Assistance
(ERA) Program
AL #: 21.023
Award #: ERA1 and ERA2
Grant Award Period: 01/11/2021 to 09/30/2022 (ERA1) and 06/08/2021 to 09/30/2025
(ERA2)
Award Year: 10/01/2021 to 09/30/2022
Criteria – The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Per section 501(k)(3)(A) of Division N of the Consolidated Appropriations Act, 2021, Pub. L. No. 116-260 (Dec. 27, 2020), which established ERA1, and per section 3201(e)(3)(f)(2) of the American Rescue Plan Act of 2021, Pub. L. No. 117-2 (March 11, 2021), which established ERA2, a grantee may only use the funds provided in the ERA to provide financial assistance and housing stability services to eligible households
An eligible household is defined as a household of 1 or more individuals who are obligated to pay rent on a residential dwelling and with respect to which the eligible grantee involved determines—
(i) that 1 or more individuals within the household has
(I) qualified for unemployment benefits or (II) experienced a reduction in household income, incurred significant costs, or experienced other financial hardship due, directly or indirectly, to the novel coronavirus disease (COVID–19) outbreak, which the applicant shall attest in writing;
(ii) that 1 or more individuals within the household can demonstrate a risk of experiencing homelessness or housing instability, which may include—
(I) a past due utility or rent notice or eviction notice;
(II) unsafe or unhealthy living conditions; or
(III) any other evidence of such risk, as determined by the eligible grantee involved; and
(iii) the household has a household income that is not more than 80 percent of the area median income for the household.
Condition – During our testing of beneficiary eligibility compliance requirements of the Emergency Rental Assistance (ERA) program, we tested 60 assistance payments (48 of the assistance payments included in the Activities Allowed or Unallowed and Allowable Costs/Cost Principles sample and an additional 12 assistance payments).
For the 48 assistance payments tested in the Activities Allowed or Unallowed and Allowable Costs/Cost Principles sample, we noted that for 31 out of the 48 assistance payments, all required supporting documentation to determine eligibility requirements were not represented at the time of testing.
For the 12 additional assistance payments tested, no supporting documentation was provided at the time of testing. We were, therefore, unable to determine whether eligibility requirements were met.
Questioned Costs – Undeterminable
Context – This is a condition identified per review of VIHFA’ compliance with specified requirements using a statistically valid sample.
Effect – Without proper maintenance of documentation to support eligibility determinations, ineligible beneficiaries may receive benefits under the ERA grant, and VIHFA may make payments on behalf of those beneficiaries, resulting in noncompliance with the eligibility requirements.
Cause – We understand that the Authority relied on additional documentation from the USVI Department of Human Services regarding eligibility documentation from other programs, such as SNAP and TANF, to determine an applicant’s eligibility for the ERA grant. However, the Authority should consistently maintain any supporting documentation used to satisfy the eligibility requirement.
Recommendation – We recommend that VIHFA strengthen its existing policies and procedures for reviewing and maintaining of appropriate documentation to ensure compliance with eligibility requirements.
Views of Responsible Officials and Planned Corrective Actions – Over the course of the ERAP Program, Treasury made several modifications to the documentation requirements to include the recognition of proxy eligibility determinants (such as SNAP’s eligibility, TANF’s eligibility) and the use of self-attestation. In certain cases, these served to negate the need for the collection of other income documentation.
Corrective Action Date: March 2023