Core Issue: Afiya Apartments processed and paid the same invoice twice, indicating a significant deficiency in internal controls over compliance.
Impacted Requirements: This affects the compliance with the HUD program's requirements for allowable activities and costs, as funds must only be used for necessary project expenses.
Recommended Follow-up: Management should assess and improve internal controls to prevent duplicate payments and ensure proper tracking of paid invoices.
Finding Text
Finding 2023-005
Type of Finding: Significant deficiency in internal control over compliance and immaterial noncompliance.
Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181)
Compliance Requirements: Allowable Activities, Allowable Costs and Special Tests and Provisions – Use
of Project Funds
Criteria: PRAC project funds must be used only for expenses that are reasonable and necessary to the
operation of the project as provided for in the Regulatory Agreement.
Condition: There was an invoice that was processed and paid twice by Afiya Apartments with project
funds. The invoice was for $99. The organization’s internal controls did not prevent or detect and correct
the error.
Cause: There were not proper internal controls in place to prevent or detect and correct the duplicate
transaction from being processed and paid with project funds.
Effect: An invoice was paid twice resulting in immaterial noncompliance with the major program
compliance requirements listed above.
Questioned Costs: None.
Repeat Finding: No.
Context: We noted one instance in our sample of 40 transactions. Our sample was not a statistically
valid sample.
Recommendation: We recommend management evaluate the design and implementation of its internal
controls over compliance with respect to project disbursements to ensure there is a process to identify
invoices that have been paid so as to avoid duplicate payments.
Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Categories
Special Tests & ProvisionsAllowable Costs / Cost PrinciplesHUD Housing ProgramsSignificant DeficiencyInternal Control / Segregation of Duties