Finding Text
Finding Number: 2021-SA5 Material Weakness – Program Income – Compliance and Control Finding
Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program
Federal Agency: U.S. Veterans Administration
Pass-Through Entity: Not applicable
Criteria or Specific Requirement: 2 CFR section 200.307, Program Income, states that ordinary program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than increase the funds committed to the project.
38 CFR 61.82 Participant fees for supportive housing states that participant fees may be used for costs of operating the supportive housing or to assist supportive housing residents’ move to permanent housing and must have a therapeutic benefit.
Condition: It does not appear that program income was tracked and expended for use of operating supportive housing or assisting housing residents.
Cause: Factors beyond the control of current management, including poorly designed policies and procedures, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards.
Effect or Potential Effect: Potential noncompliance related to requesting additional reimbursement before program income was spent. Additionally, as noted in Finding 2021-SA1 program income expended was not appropriately included on the SEFA.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management.
Recommendation: Policies and procedures should be designed and implemented to ensure program income is tracked and expended appropriately.
View of Responsible Officials: In response to finding number 2021-SA5, management agrees with the finding and will design, implement, and maintain policies and procedures that ensure program income is tracked and expended appropriately.