Finding 561615 (2023-004)

2023-004 Eligibility Prior Year Finding Number: 2022-006 Year of Finding Origination: 2022 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 Pass-Through Agency: N/A - Direct 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. The U.S. Department of the Treasury Frequently Asked Questions for Emergency Rental Assistance (ERA), revised July 27, 2022, requires grantees to obtain a current lease that identifies the unit where the applicant resides, to have support that an applicant is at risk of experiencing homelessness with a written attestation from the applicant or evidence of risk as determined by the grantee, have a reasonable basis for determining and redetermining income, and have documentation of the cost of any hotel or motel charged to the grant and the cost of the hotel or motel stay not include expenses incidental to the charge for the room. Title 2 U.S. Code of Federal Regulations § 200.403(g) requires costs to be adequately documented. In addition, the County’s Federal Emergency Program Guide for Tenant Application requires the County to obtain a written attestation if the Household has no qualifying income, or does not have documentation of all current income, and requires the County to use the Homeless Management Information System (HMIS) record when eligibility is based on homelessness. Condition: In a sample of 16 participant’s eligibility documentation tested, the following exceptions were detected: • For one participant, the address indicated on the ERA Request Form did not agree to the address included in the lease agreement. • Three participants did not have documentation to support that they were at risk of experiencing homelessness. • Three participants did not have documentation to support a reasonable basis for determining income. • Two participants did not have documentation to support a redetermination of income. • Three participants had instances where one-time payments, such as security deposits and application fees, were duplicated. • Thirteen participants did not have documentation originating from the hotel or shelter supporting payment amount and that incidental expenses were not included. • Eight participants had inconsistencies in the payment data provided between the participant name noted as the payee and the participant name noted as being applicable to in the transaction description. Questioned Costs: $140,822. Questioned costs are calculated based on payments to sampled participants. The amounts relating to costs that were not supported by adequate documentation at the time of the audit are $138,844, and amounts relating to duplicate payments are $1,978. These questioned costs were provided to a subrecipient that made the direct payments on behalf of participants. Context: The County had 80 total participants for the COVID-19 – Emergency Rental Assistance Program in 2023. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The County is not in compliance with requirements of the U.S. Department of the Treasury and the County’s Program Guide for Tenant Application. Cause: The County informed us that documentation could not be located, and that a number of staff who were involved in the program are no longer a part of the department. In addition, the County informed us that it had a contract in place with a consultant to assist the County in housing participants. However, no documentation was provided supporting detailed hotel expenses. Lastly, the County informed us that the inconsistencies in the payment data appears to have been clerical mistakes. Recommendation: We recommend the County maintain documentation supporting participant eligibility in a location accessible to County staff. In addition, we recommend the County obtain documentation originating from hotels or shelters in sufficient detail as to provide support for costs charged to the grant and verify incidental expenses are not included. View of Responsible Official: Concur