Finding Text
2021-003 – Segregation of Duties (Significant Deficiency; Other Noncompliance)
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Title: HOME Investment Partnerships Program
Assistance Listing Number: 14.239
Condition: During our testing of new loans charged to the HOME Investment Partnerships Program, we
tested a sample of 13 loan disbursements out of the population of 185 new loan disbursements during
2021. For one loan out of our sample we identified that the same individual who approved the loan also
signed the distribution check.
Criteria: In accordance with Uniform Guidance Part 200.303, DBAS must establish and maintain effective
internal control 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. These internal controls should be in compliance with guidance in
“Standards for Internal Control in the Federal Government” issued by the Comptroller General of the
United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
Context: Using the complete population of 185 new loan disbursements in 2021 charged to the HOME
Investment Partnerships Program, we tested a sample of 13 loan disbursements.
Effect: Proper segregation of duties was not followed presenting elevated risks of unauthorized or
inaccurate issuance of loan proceeds.
Questioned costs: None
Repeat finding: No
Cause: Management did not have adequate internal controls in place for proper segregation of duties.
Recommendation: We recommend loan approval and check signer controls be reviewed and revised to
ensure segregation of duties concerns are mitigated.
Management Response: Due to the COVID-19 pandemic, DBAS worked a staggered schedule for the
staff to include vulnerable employees who are 60+ year olds (management) to work remotely from home.
Two of the signors fall under this category. DBAS will ensure and enforce proper segregation of duties will
be followed. Loan approval and check signer controls will be reviewed and revised to ensure segregation
of duties concerns are mitigated moving forward. This situation has since been addressed and corrected
with the return of staff to the office.