Finding 51408 (2022-005)

2022-005 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: N/A Repeat Finding Since: N/A Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of the Treasury Program: 21.023 COVID-19 ? Emergency Rental Assistance Program Criteria: Title 2 U.S. Code of Federal Regulations ? 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Per the County?s subrecipient agreements, ?each jurisdiction?s program allocation may only be used to provide Emergency Rental Assistance (ERA) [or Financial Assistance] to eligible households within the geographical boundaries of that jurisdiction.? In addition, Part 3 of the OMB Compliance Supplement states that improper payments include any duplicate payment. Condition: The following exceptions were detected in the audit of COVID-19 ? Emergency Rental Assistance Program: ? In the sample of 15 disbursements tested, five consisted of advance payments to the County?s subrecipients where itemized documentation was not subsequently obtained, and ? In the sample of three journal entries tested, all three included duplicate expenditures. Questioned Costs: $254,296 Context: The County was allocated over $15 million in ERA1 and ERA2 funds between 2021 and 2022, expending $6,470,692 in 2022. Of this amount, $5,741,917 was passed through to subrecipients in 2022. The County completed monitoring procedures over its subrecipients at the beginning of 2022, reviewed spending of the subrecipients against budgets established at the beginning of the program, and viewed data entered by its subrecipients into online portals noting rent and utility assistance provided. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: By not obtaining itemized documentation, the County cannot be assured that its subrecipients were expending funds on allowable activities and met the requirements of allowable costs. Excess funding was to be returned to the U.S. Department of the Treasury for reallocation. Cause: The County considered its subrecipient monitoring procedures and monitoring of spending and online portals sufficient in lieu of obtaining itemized documentation. The County created journal entries to move funding between the ERA1 and ERA2 Programs to close and ?clean up? the ERA1 Program. Recommendation: We recommend the County obtain supporting documentation related to advances, including payroll and general ledger reports, and itemized receipts for purchases prior to disbursing subsequent advances. In addition, we recommend the County implement procedures to ensure that only allowable program expenditures are reimbursed, taking special care with journal entries to ensure expenditures are not duplicated. View of Responsible Official: Acknowledge