Finding Text
Information on the Federal Program: Assistance Listing Number 14.267? U.S. Department of Housing and Urban Development ? Office of Community Planning and Development ? Continuum of Care Program. Awarding Entity: Office of Community Planning and Development ? San Francisco Regional Office. Compliance Requirements: Special Tests and Provision, and Reporting. Type of Finding: Material Weakness. Criteria: Program requirements state that where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. Further, required reports for federal awards should include all activities of the reporting period, are supported by applicable accounting or performance records, and are fairly presented in accordance with governing requirements. Condition: For the year ended June 30, 2022, we reviewed the Organization?s rent calculation methodology to ascertain that the amounts billed to its tenants are reasonable. Cause: The Organization encountered employee turnover in certain program management position during the year. Effect or Potential Effect: As a result, the entity was not able to provide consistent documentation for our testing procedures over rental reasonableness. Context: Upon examination and review of correspondences provided for program income and rental reasonableness compliance testing purposes, it was noted that the Organization could not provide complete and consistent records for us to test program income compliance area and special tests and provision compliance area, respectively. In addition, it is noted that there were instances of deviation from key control activities such as annual verification of client income and inconsistent application of rent calculation methodology, causing charged client rents that do not correspond to rent calculations or lease agreements. Recommendation: We recommend that the Organization improve its documentation retention for client rent correspondences by adhering to its formal process of record retention system. We also recommend that the Organization adhere to its established key control activities so that potential misstatement and/or noncompliance can be prevented, or detected and corrected, on a timely basis. Views of Responsible Official: Management of Caminar concurs with the audit finding. The individual preparing the report has been informed of the proper requirements, and management will perform a quality control review over future report submissions to ensure key control activities are performed periodically and complete and consistent documentation are retained.