Finding 479384 (2024-001)

Finding No. 2024-001 – Repayment agreement requested in voucher. Federal Program ALN 14.157 - U.S. Department of Housing and Urban Development Section 202 Capital Advance Program – Supportive Housing for the Elderly Name of Federal Agency U. S. Department of Housing and Urban Development (HUD) Category Other Matter Compliance requirement Cash Management Criteria Under CFR 200.305 Federal payment states the following: (1) The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non_x0002_Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. Condition During the audit testing of cash management, we identified one voucher for the month of August 2023, that incorrectly included $1,348 of funds pertaining to a tenant repayment agreement. The management of the Project acknowledged that they did not detect that the repayment agreement amount had been included in the voucher. Additionally, the tenant disappeared after signing the repayment agreement without fulfilling her obligation. Cause The inclusion of the incorrect amount corresponding to a repayment agreement was due to administrative errors and to lack of effective internal controls for the review and approval of vouchers to be submitted to HUD. Effect Funds amounting to $1,348 had to be returned due to inaccuracies in the original voucher requests submitted to HUD. Questioned Cost Total known question cost to be reimbursed to HUD amounting to $1,348. Context The population consists of twelve vouchers. We selected a sample of two vouchers from this population. Upon audit procedures, we identified an error in one of the vouchers, which amounted to a total of $1,348 that needs to be refunded. Prior year finding No Recommendation We recommended that the Project administrator implement a more thorough review process for voucher details before finalization. This should include a verification step specifically focused on ensuring all amounts, including repayment agreement amounts, are accurately included. Training on the importance of detailed data entry and implementing a secondary review by another staff member could also help identify and correct errors before vouchers are processed. Views of responsible officials and planned corrective actions. The Project’s management agrees with this finding. Please refer to the corrective action plan on page 41