Finding Text
U.S. Department of Housing and Urban Development
Federal Financial Assistance Listing # 14.155
Section 223(f) Mortgage Insurance for the Purchase or Refinance of Existing Multifamily
Housing Projects
Special Tests and Provisions
Significant Deficiency in Internal Control over Compliance
Criteria: 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
conditions of the federal award.
Condition: During our testing, there was no documentation maintained for a portion of the sample selected.
Cause: The Project did not have an internal control process in place to ensure that allowable expenses were all
properly supported.
Effect: The lack of adequate policies governing expenditure support increases the risk that employees
participating in the federal award administration may not be able to detect and correct noncompliance in a
timely manner.
Questioned Costs: None reported.
Context: A nonstatistical sample of 60 expenditures were selected for testing, which accounted for $47,720 of
$463,490 direct program expenditures. Of these 60 items, two were unsupported.
Repeat Finding from Prior Years: No
Recommendation: We recommend that the Project enhance internal control policies to ensure all expenditures
are supported to ensure that all payments are necessary, correct, meet the requirements of the federal
program, and are properly recorded in the reports required to be submitted to the federal agency.
Views of Responsible Officials: Management agrees with the finding.