Finding 47164 (2022-002)

Significant Deficiency
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2022-11-06

AI Summary

  • Core Issue: There is a significant deficiency in internal controls over compliance related to timesheet approvals for Project funds.
  • Impacted Requirements: Compliance with 2 CFR 200.303(a) is compromised due to lapses in oversight of timesheet approvals.
  • Recommended Follow-Up: Review and reinforce policies on timesheet approval processes with all relevant employees.

Finding Text

2022-002 U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.155 Section 223(f) Mortgage Insurance for the Purchase of Refinancing of Existing Multifamily Housing Projects Special Tests and Provisions: Property and Operations, Distributions, and Reimbursement of Advances Significant Deficiency in Internal Control over Compliance Criteria: 2 CRF 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Our testing of the use of Project funds detected one instance where an employee?s timesheet was not approved and one instance where an employee?s timesheet was approved after payroll; however, we were unable to determine whether the review occurred within a reasonable amount of time after the payroll period. Cause: There was a lapse in oversight of the internal control process designed to ensure timesheets are properly approved and approved within a reasonable amount of time after the payroll period. Effect: Lack of compliance with designed internal controls over use of Project funds could adversely affect the Project?s compliance with HUD regulations. Questioned Costs: $0 Context/Sampling: A nonstatistical sample of 60 of the Project?s 660 disbursements ($235,759 of $1,234,314 total disbursements), including payroll and non-payroll, was selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend the Project review policies and procedures with applicable employees and remind them of the importance of established review and monitoring processes. Views of Responsible Officials: Management agrees with the finding and the recommendation.

Corrective Action Plan

Finding 2022-002 Federal Agency Name: U.S. Department of Housing and Urban Development Program Name: Section 223(f) Mortgage Insurance for the Purchase of Refinancing of Existing Multifamily Housing Projects Federal Financial Assistance Listing #14.155 Finding Summary: The Project?s internal control process requires approval of timesheets. During testing, there was one instance where an employee?s timesheet was not approved and one instance where an employee?s timesheet was approved after payroll; however, we were unable to determine whether the review occurred within a reasonable amount of time after the payroll period. Responsible Individuals: Lana Walter, Manager, Regional Affordable Housing and Matt Sieler, Supervisor Accounting Corrective Action Plan: We will review our procedures with applicable employees to ensure compliance with designed controls. Anticipated Correction Date: January 31, 2022

Categories

HUD Housing Programs Internal Control / Segregation of Duties Special Tests & Provisions Procurement, Suspension & Debarment Subrecipient Monitoring Cash Management Significant Deficiency

Other Findings in this Audit

  • 47165 2022-003
    Significant Deficiency
  • 623606 2022-002
    Significant Deficiency
  • 623607 2022-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $2.53M
14.195 Section 8 Housing Assistance Payments Program $659,601