Finding Text
2023-005 ALN 14.872 – Public Housing Capital Fund Program – Allowable Costs
Condition and Criteria:
In accordance with the cost principles under 2 CFR part 200, subpart E, costs
must be necessary and reasonable for the performance of the Federal award,
conform to any limitations or exclusions set forth in 2 CFR part 200, subpart
E, and be adequately documented.
During our audit, it was determined that internal control deficiencies over
compliance existed related to the Authority’s compliance with the Capital
Fund Program’s allowable costs/cost principles compliance provisions.
Identified control and compliance deviations included costs that were not
adequately documented.
Amount of Questioned Costs: $644,005
Context: The lack of supporting documentation was observed for 9 out of the 17 check
disbursements tested during our audit, including check disbursements from
the capital fund programs. The Authority was unable to locate supporting
documentation for 9 of the 17 checks disbursements tested including check
vouchers, invoices, or pay requests.
Cause:
The Authority’s prior management’s internal controls over the Capital Fund
Program’s allowable costs/cost principles compliance provision that were in
place were deficient. Staff who had the ability to make purchases and procure
contracts did not adequately follow the cost principles included in 2 CFR part
200, subpart E, and therefore, the Authority did not have adequate support for
check disbursements.
Effect: The Authority could incur costs that are unallowable and that are not
necessary or reasonable. These internal control deficiencies could result in a
possibility that errors or irregularities relating to costs can exist and not be
detected by the Authority’s internal controls.
Auditor’s Recommendation:
We recommend that the Authority’s management take the necessary steps to
ensure that all disbursements are sufficiently documented and supported by
adequate backup. We also recommend that the Authority implement controls
to detect when check disbursements do not have adequate support in
accordance with 2 CFR part 200, subpart E.
Grantee Response:
Management agrees with the finding and will follow the Auditor's
recommendations.