Finding 539409 (2024-004)

Finding 2024‐004: Significant Deficiency and Non‐Material Noncompliance – Housing Voucher Cluster REAC Report Criteria: Per 2 CFR Section 200.303, non‐Federal entities receiving federal awards must establish and maintain internal controls designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the federal award. In accordance with the requirements of this program, grant recipients are to maintain complete and accurate accounts which requires that (1) account balances are properly maintained, (2) records and accounting transactions support a proper roll‐forward of equity, and (3) errors are corrected and detected. Condition: During our testing, we noted that the County’s Real Estate Assessment Center (“REAC”) submission from 2022 and 2023 were rejected by the US Department of Housing and Urban Development (“HUD”) because amounts did not properly roll forward from previous periods. The REAC submission did not meet the requirement of being completed timely and accurately. Cause: The County’s internal control to ensure the accuracy of the REAC submissions was not operating effectively. Effect: Inaccurate record keeping results in unreliable information on which to base decision making. This also resulted in rejected REAC submissions. Questioned Costs: None Repeat Finding: No Recommendation: The County utilizes contractors to assist in HUD REAC submissions. However, a contractor with accounting expertise lacks context related to the activities and administration of the program at the County. We recommend that the individuals overseeing the process of completing HUD REAC submissions conduct thorough reviews of the accounting records that support the REAC submission inputs and that the amounts are reported on the proper Financial Data Schedule Lines within the REAC submission. Views of Responsible Officials: The Office of Housing and Community Development concurs with the finding and recommendations.