Finding Text
United States Department of the Treasury Reference Number: 2022-005 Program: 21.023 COVID-19 Emergency Rental Assistance Federal Award Number: ERA-2101123208 Type of Finding: Significant Deficiency in Internal Controls over Compliance Compliance Requirement: Allowable Cost / Cost Principles Condition: The following conditions were revealed during audit testing of the ERA Program: As reported in financial statement finding 2022-002, during the year ended June 30, 2021, DSHA commenced operation of the ERA Program which was funded by the Consolidated Appropriations Act, 2020 and the American Rescue Plan Act of 2021. DSHA identified potential errors in the processing and payment of assistance totaling approximately $904,000 that occurred during the period of May 1, 2021 through September 30, 2021. We consider DSHA?s design over the processing of payments included the following steps, performed by ERA Program Management internal control design weaknesses which, together, we consider a significant deficiency: ? The vendor information for some landlords, deemed eligible for receiving rental assistance for eligible renters, from the ERA Program software, was manually matched with pre-existing DSHA vendor information in the MITAS accounting system, to facilitate the payment of rental assistance. The matching of the landlord information to the vendor information in the MITAS vendor database was not adequately reviewed by DSHA personnel prior to initiating vendor payments, resulting in erroneous payments. ? ERA Program management uploaded vendor landlord payments calculated in the ERA Program software to DSHA?s accounting system without a detailed review, before disbursement of the funds, to verify that the payments were directed to the correct landlord(s). Criteria: DSHA management is responsible for establishing and maintaining effective internal control over compliance with the provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material on the federal program. Questioned Costs: None. DSHA?s remediation plan includes funding of payment errors from non-federal funds. Effect: Federal program expenditures of rental assistance were overpaid, and errors were made in the disbursement of approved rental assistance. Cause: Internal controls over compliance were not appropriately designed, implemented, or operated to address the risk of noncompliance with the federal program requirements. Recommendation: We recommend DSHA enhance its policies and procedures for processing rental assistance applications to ensure compliance with the federal program?s requirements.