Finding 480100 (2023-001)

Significant Deficiency
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2024-08-01
Audit: 316413
Auditor: Bonadio & CO LLP

AI Summary

  • Core Issue: The Organization failed to document rent reasonableness assessments for beneficiaries, with only 13 out of 40 having proper evaluations.
  • Impacted Requirements: This deficiency violates the requirement to establish reasonable rents for comparable unassisted units as per HUD guidelines.
  • Recommended Follow-Up: Management should enhance internal controls and processes to ensure all beneficiaries receive proper rent reasonableness assessments moving forward.

Finding Text

Finding Number 2023-001 (Significant Deficiency - ASSISTANCE LISTING #14.267) U.S. Department of Housing and Urban Development Grant number NY1135L2C002104 / NY1135L2C002205 Grant period July 1, 2022 through June 30, 2023 / July 1, 2023 through June 30, 2024 Condition: The rents charged to beneficiaries, who receive rent assistance through the program, must be reasonable in relation to rents being charged for comparable units. The Organization is required to establish the reasonableness of the rents charged by the property owner for comparable unassisted units. Out of 40 program beneficiaries selected for testing, the Organization had a documented rent reasonableness assessment for only 13 of the selections. Criteria: The Organization is required to establish the reasonableness of the rents charged by the property owner for comparable unassisted units as specified in the N- Special Tests and Provisions compliance requirement. Cause: The Organization did not have a process in place to establish rent reasonableness for the entire reporting period. Effect: The Organization had not met the program requirement in establishing the reasonableness of rent charged to program beneficiaries for the entire reporting period. Context: Out of 40 program beneficiaries selected for testing, The Organization had a documented rent reasonableness assessment for only 13 of the selections. This sample was not statistically valid as a haphazard selection method was utilized in identifying the sample. Recommendation: Management should implement a system and internal control process to ensure the proper reasonableness assessment is being made for each program beneficiary. Management’s Response: Policies and procedures have been established to properly meet the recommendation. During 2023, the U.S. Department of Housing and Urban Development had performed their own audit of the program and identified this same matter to management. After management was informed of this deficiency, they took direct action during 2023 to implement procedures to prevent this issue in the future.

Corrective Action Plan

U.S. Department of Housing and Urban Development Delphi Drug & Alcohol Council, Inc. respectfully submits the following corrective action plan for the year ended December 31, 2023. Name and address of independent public accounting firm: Bonadio & Co, LLP 100 Corporate Parkway Suite 200 Amherst, New York 14226 Audit Period: January 1, 2023 through December 31, 2023 The significant deficiency from the December 31, 2023 schedule of findings and questioned costs is discussed below. It is numbered consistently with the number assigned in the schedule. Federal Award Finding and Questioned Costs Name of Contact Person: Jennifer Cathy, Executive Director Anticipated Completion Date: December 31, 2024 2023-001 – Significant Deficiency Corrective Action Plan: Condition: The rents charged to beneficiaries, who receive rent assistance through the program, must be reasonable in relation to rents being charged for comparable units. The Organization is required to establish the reasonableness of the rents charged by the property owner for comparable unassisted units. Out of 40 program beneficiaries selected for testing, The Organization had a documented rent reasonableness assessment for only 13 of the selections. Recommendation: Management should implement a system and internal control process to ensure the proper reasonableness assessment is being made for each program beneficiary. Current Status: Policies and procedures have been established to properly meet the recommendation. During 2023, the U.S. Department of Housing and Urban Development had performed their own audit of the program and identified this same matter to management. After management was informed of this deficiency, they took direct action during 2023 to implement procedures to prevent this issue in the future. If the U.S. Department of Housing and Urban Development has questions regarding this plan, please call Ms. Jennifer Cathy at (585) 355-7842.

Categories

Special Tests & Provisions HUD Housing Programs Reporting Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 480101 2023-001
    Significant Deficiency
  • 1056542 2023-001
    Significant Deficiency
  • 1056543 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.267 Continuum of Care Program $192,600
93.788 Opioid Str $155,521
93.959 Block Grants for Prevention and Treatment of Substance Abuse $141,091
93.243 Substance Abuse and Mental Health Services_projects of Regional and National Significance $48,870