Finding Text
Significant Deficiency in Internal Controls over Compliance/Compliance with Regulations – Federal
Awards Compliance – Allowable Costs
Criteria: Under the Code of Federal Regulations Title 2, Part 2, Subpart E, Section 200.438:
Costs of entertainment, including amusement, diversion, and social activities and any associated costs
are unallowable, except where specific costs that might otherwise be considered entertainment have a
programmatic purpose and are authorized either in the approved budget for the Federal award or with
prior written approval of the Federal awarding agency.
Condition: The Project has paid for tenant cable with federal funds in a bulk package where not all of the
costs was covered by the tenants.
Context: The Project was not fully aware that cable was considered an entertainment expense, and
therefore unallowed under Federal regulations.
Cause: The Project did not have sufficient controls in place to ensure the allowability of expenses being
paid under Federal regulations were appropriate.
Effect: The Project was not in compliance with the Code of Federal Regulations Title 2, Part 2, Subpart E,
Section 200.438.
Recommendation: The Project should develop adequate controls over compliance in relation to
allowability to allow the Project comply with Federal regulations regarding the use of cash received through
Federal awards.
Auditee Response/Corrective Action Plan: See pages 37.
Significant Deficiency in Internal Controls over Compliance/Compliance with Regulations – Federal
Awards Compliance – Allowable Costs
Federal Program: ALN 14.157 – Supportive Housing for the Elderly
Pass-Through Entity: U.S. Housing and Urban Development
Award Number: 103-HD010-NP-CMI
Compliance Requirements: Allowable Costs
Type of Finding: Significant Deficiency in Internal Control over Compliance
Criteria: See Part II, Finding 2023-001
Condition and Context: See Part II, Finding 2023-001
Questioned Costs: N/A
Cause: See Part II, Finding 2023-001
Effect or Potential Effect: See Part II, Finding 2023-001
Recommendation: See Part II, Finding 2023-001
Repeat Finding: N/A
Responsible Official’s Response and Corrective Action Plan: See Page 37, Finding 2023-001
Planned Implementation Date: See Page 37, Finding 2023-001
Person Responsible for Corrective Action: Director of Finance