Benton County
January 1, 2022 through December 31, 2022
2022-003 The County did not have adequate internal controls for ensuring
compliance with federal reporting requirements for the Emergency
Rental Assistance Program.
Assistance Listing Number and Title: 21.023, COVID-19 Emergency
Rental Assistance Program
Federal Grantor Name: U.S. Department of the Treasury
Federal Award/Contract Number: N/A
Pass-through Entity Name:
Pass-through Award/Contract
Number:
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
Congress passed two acts authorizing federal funds for the Emergency Rental
Assistance (ERA) program to respond to the COVID-19 pandemic. The
Consolidated Appropriations Act, 2021 was enacted on December 27, 2020, and
provided $25 billion for ERA. These funds are known as ERA1. The American
Rescue Plan Act of 2021 was enacted on March 11, 2021, and provided $21.6
billion in additional funding for ERA. These funds are known as ERA2. These acts
provide funds directly to states, U.S. territories, local governments and, in the case
of ERA1, Indian tribes to assist eligible households through existing or newly
created rental assistance programs.
The purpose of the ERA program is to provide direct payments to eligible entities
that award financial assistance to eligible households as well as provide housing
stability services. ERA grantees may provide assistance to eligible households
directly or to landlords and utility providers on behalf of eligible households.
The County received an award from the U.S. Department of the Treasury to provide
financial assistance to eligible households, including payment of rent, utilities and
other housing stability services. During fiscal year 2022, the County spent $229,617
of this award.
Federal regulations require recipients to establish and maintain internal controls
that ensure compliance with program requirements. These controls include
understanding program requirements and monitoring the effectiveness of
established controls.
To comply with reporting requirements, the County must submit to the Treasury
monthly and quarterly ERA 1 and ERA 2 reports (special reporting 1505-0266 and
1505-0270, respectively). The monthly reports must identify key information such
as the number of participating households the county provided ERA assistance of
any kind to and the total amount of ERA funds the County expended for these
households. The quarterly reports identify the total amount obligated by the County
and total amount expended. Both reports are important because the Treasury uses
the amounts expended and obligated to assess grantee eligibility for reallocation
payments and to determine if the County is subject to involuntary recapture of funds
to reallocate to other grantees or return to the grantor.
Our audit found that the County’s internal controls were inadequate for ensuring it
submitted the monthly and quarterly ERA reports and included accurate
information. Specifically, the County did not submit three of the nine required
monthly reports. Additionally, the County did not include the required
accumulative expenditures and accumulated obligations in the final quarterly
report.
We consider this deficiency in internal controls to be a material weakness that led
to material noncompliance.
Cause of Condition
Due to staff turnover and technical issues in accessing the Treasurer’s portal, the
County did not submit all the required monthly reports. Also, the County employee
responsible for the program was new to the position and did not ensure the quarterly
reports included all required information.
Effect of Condition
The U.S. Department of Treasury uses these reports to assess grantee eligibility for
reallocation payments and to determine if the grantee is subject to involuntary
recapture of funds to reallocate to other grantees or return to the grantor. Any
inaccurate information in these monthly and quarterly reports limits the Treasury’s
ability to decide reallocations, maintain transparency and fulfill its legal
obligations. Since the County was unable to provide the data it used to prepare the
reports, it cannot demonstrate the accuracy of the information reported.
Recommendation
We recommend that the County implement internal controls to ensure it submits all
monthly reports and accurate quarterly reports.
County’s Response
Auditor’s Remarks
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), section 516, Audit findings, establishes reporting
requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.
Title 2 CFR Part 200, Uniform Guidance, section 329, Monitoring and reporting
program performance, describes the requirements for auditees to perform oversight
of the operations of the federal award supported activities to ensure compliance
with applicable federal requirements and performance expectations.
The Consolidated Appropriations Act, 2021, title V, Banking, subtitle A,
Emergency Rental Assistance, section 501(g), Reporting requirements, describes
the required performance and financial data and frequency of reports for this federal
program. Section 501(b) describes the reallocation requirements.