Finding 601784 (2022-002)

FINDING 2022-002 Assistance Listing Number 21.023 COVID-19 Emergency Rental Assistance Program Federal Agency U.S. Department of Treasury Pass-through Agency Not applicable Award Numbers / Years 2022 City Departments Department of Housing Criteria: According to Treasury guidance, recipients of the Emergency Rental Assistance Program (ERAP) are expected to develop guidelines for determining eligibility of beneficiaries. The City contracted with a local agency to make eligibility determinations and authorize the related payments to beneficiaries based on the guidelines established by the City. The City purchased a software program to assist in the record-keeping and documentation of the case management process from intake to eligibility determinations to payment authorization. Condition/Context: After conducting an extensive analysis of payments made under ERAP, the City has determined that there are potential unallowable payments that were made to ineligible beneficiaries. In addition, the City noted that some eligibility determinations were made and approved by the same person employed by the contractor, resulting in a lack of internal controls over the process. The City is in the process of investigating the validity and extent of potential unallowable payments made. In a sample of 60 benefit payments made, we noted 8 instances where the eligibility determination was approved by the same person who made the determination. Our sample was not statistically valid. Effect: It is possible that program payments were made to ineligible participants. Questioned Costs: Questioned costs cannot be determined at this time. Cause: Payments to potentially ineligible beneficiaries were likely due to the large volume of applications processed by the contractor required in a short amount of time. According to Treasury guidelines, the burden of proof of meeting eligibility guidelines is low; therefore, applicants may have provided inaccurate data in order to receive payments under the program. The software system used by the contractor appears to be lacking certain controls that would ensure proper segregation of duties between personnel determining eligibility and personnel reviewing eligibility determinations. Recommendation: We recommend the City continue to investigate questionable cases to determine the validity of the payments made and to quantify the amount of ineligible payments made. Views of Responsible Officials: See Corrective Action Plan.