Finding 504427 (2023-002)

Significant Deficiency
Requirement
H
Questioned Costs
-
Year
2023
Accepted
2024-11-01
Audit: 326982
Organization: Horizon House, Inc. (PA)
Auditor: Bdo USA PC

AI Summary

  • Core Issue: Some expenditures charged to the federal program exceeded allowable costs due to improper review and approval processes.
  • Impacted Requirements: Costs must align with the lease and subsidy agreements, and only allowable costs during the funding period should be charged.
  • Recommended Follow-Up: Implement stricter review protocols and enhance communication between fiscal approvers and program directors to ensure accurate expenditure approvals.

Finding Text

Information on Federal Program - Department of Housing and Urban Development, Assistance Listing Number 14.267 - Continuum of Care Program Criteria –The Code of Federal Regulations Section 200 infers where a funding period is specified, a recipient may charge to the grant only allowable costs resulting from obligations incurred during the funding period and any pre-award costs authorized by the Federal awarding agency. Condition – During our testing of direct expenditures at contract period beginning and end dates, the following exceptions were noted: • Three of the forty expenditures sampled related to rent subsidies in which the rents expended and paid were higher than the amount the Agency was required to pay in accordance with the lease agreement and participant subsidy agreement in place. • One of the forty expenditures sampled was incorrectly recorded to the program. Cause – Review and approval protocols were not appropriately adhered to in certain instances to ensure that costs being charged to the federal program were properly supported. Potential Effect – While the impact of the exceptions and projection of other potential exceptions did not result in any questioned costs, insufficient controls in place could result in reportable questioned costs in future periods. Questioned Costs – Likely questioned costs were projected to be less than $25,000 based on the sampling procedures that were performed. Context – We selected a sample of forty direct expense transactions at contract beginning and ending dates using a statistically valid sample. During our testing, we found four exceptions that resulted in charges that were in whole or in part overstated during the contract period by a total of $710. An exception extrapolation was then performed which resulted in a projected error below the reportable questioned costs threshold. Recommendation – The approval protocols that were not appropriately adhered to related to a lack of communication between the fiscal approvers and program directors. In order to ensure proper recognition and accuracy, BDO recommends that management design and implement more stringent protocols for the review and approval of expenditures that requires the communication and collaboration between the Agency’s departments be documented prior to approval. Views of Responsible Officials – Management agrees with the finding and recommendation set forth within and has developed a corrective action pan to address the lapses in internal control over compliance.

Categories

Allowable Costs / Cost Principles Period of Performance Internal Control / Segregation of Duties

Other Findings in this Audit

  • 504425 2023-002
    Significant Deficiency
  • 504426 2023-002
    Significant Deficiency
  • 504428 2023-002
    Significant Deficiency
  • 1080867 2023-002
    Significant Deficiency
  • 1080868 2023-002
    Significant Deficiency
  • 1080869 2023-002
    Significant Deficiency
  • 1080870 2023-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.667 Social Services Block Grant $291,794
14.267 Continuum of Care Program $271,907
14.238 Shelter Plus Care $194,057
93.958 Block Grants for Community Mental Health Services $112,013
93.498 Provider Relief Fund and American Rescue Plan (arp) Rural Distribution $110,326
93.150 Projects for Assistance in Transition From Homelessness (path) $103,007
21.027 Coronavirus State and Local Fiscal Recovery Funds $49,115