Finding 50450 (2022-001)

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Requirement
P
Questioned Costs
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Year
2022
Accepted
2023-09-18
Audit: 44111

AI Summary

  • Core Issue: Fraudulent applications led to improper rental assistance payments totaling $18,437.50.
  • Impacted Requirements: Compliance with 2 CRF section 200.516(a)(6) regarding reporting fraud in federal programs.
  • Recommended Follow-Up: Terminate the housing provider's contract, return funds, and improve verification procedures.

Finding Text

Current Year Finding - Major Federal Award Programs Audit 2022-001 ? Fraud Affecting Federal Program Federal Awarding Agency ? U.S. Department of the Treasury Pass-Through Entity ? Texas Department of Housing and Community Affairs Assistance Listing and Title ? 21.023 Emergency Rental Assistance Program Condition: Through an internal review, BR3T identified twenty cases where rental assistance payments were made for security deposits, utility deposits, and application fees based on fraudulent applications and false documentation submitted to BR3T by a contracted housing provider. For three of the cases, assistance payments amounted to $1,800 during the year ended December 31, 2022. For the remaining seventeen cases, assistance payments totaled $16,637.50 and were made in 2023. Criteria: Per 2 CRF section 200.516(a)(6), an auditor must report known or likely fraud affecting a federal program award. Effect: BR3T issued rental assistance payments to a housing provider based on fraudulent documentation. Cause of Condition: The housing provider supplied fraudulent documentation to BR3T in order to receive rental assistance payments. Recommendation: We recommend management terminate its relationship with the housing provider and return the federal funds to the grantor for the cases identified by BR3T. In addition, we recommend management enhance its procedures to verify and ensure that communication with clients is from a valid source. Management Response: Management accepts the finding and recommendation.

Corrective Action Plan

BR3T is no longer doing business with Southpark (housing provider). All money for payments for fraudulent Security deposits/Application Fees/ Utility deposits ($18,437.50) was reimbursed from Southpark to BR3T and then from BR3T to TDHCA. Police report filed. When multiple applications come from the same apartment complex, BR3T does more investigating and follow-ups with the clients. BR3T is especially cautious when only one apartment employee is sending all documentation. New BR3T Policy: No security deposit assistance for a rental unit with a family member/friend as the landlord. BR3T documents connections between clients and landlords. Trends and Patterns. BR3T is acting more quickly on trends and patterns. We have added more reports to the monitoring dashboard to identify trends.

Categories

Subrecipient Monitoring

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
21.023 Emergency Rental Assistance Program $1.32M