Finding 513903 (2023-001)

2023-001 – ALN 14.850 – Public & Indian Housing – Allowable Costs Condition and Criteria: Loss of Internal Controls over Credit Card In a sample of Five (5) months of Credit Card statements and reconciliations, the following deficiencies were noted: 1 Month (January 2023) had an amount of $1,416.44 of transactions that were not supported 2 Month (February 2023) had an amount of $4,174.24 of transactions that were not supported. 3 Month (March 2023) had an amount of $1,501.68 of transactions that were not supported . 4 Month (August 2023) had an amount of $534.45 of transactions that were not supported . 5 Month (November 2023) had an amount of $476.38 of transactions that were not supported . 1 CFR § 200.303 states that (a) The PHA must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with the cost principles under 2 CFR part 200, subpart E, costs must be necessary and reasonable for the performance of the Federal award, conform to any limitations or exclusions set forth in 2 CFR part 200, subpart E, and be adequately documented. Amount of Questioned Costs. None. Context: Of forty check disbursements tested, five of these disbursements were credit card payments. The Authority was unable to locate supporting backup documentation for some of the charges on all five of these credit card disbursements tested. Cause: The Authority's deficiencies in its credit card reconciliations stem from a lack of certain controls concerning HUD requirements and procedures. Effect: The Authority has not been in complete compliance with HUD requirements. The Authority could incur costs that are unallowable and that are not necessary or reasonable. These internal control deficiencies could result in a possibility that errors or irregularities relating to costs can exist and not be detected by the Authority’s internal controls. Auditor’s Recommendation: We recommend that the Authority’s management take the necessary steps to ensure that all disbursements are sufficiently documented and supported by adequate backup. We also recommend that the Authority implement controls to detect when check disbursements do not have adequate support in accordance with 2 CFR part 200, subpart E. Grantee Response: Current management acknowledges the finding and is following the auditor’s recommendations.