Finding 616500 (2022-004)

2022-004 Emergency Rental Assistance Payments Based on Fraudulent Applications Submitted to the Program Program(s): Emergency Rental Assistance Program (AL# 21.023) Criteria or Specific Requirement - Uniform Guidance requires that program expenditures be allowable based on program legislation, federal awarding agency regulations, and/or the terms and conditions of the award. Condition and Context - During the course of our audit, program management made us aware that payments were issued from the Emergency Rental Assistance Program to an applicant who submitted fraudulent applications to the program. This situation was discovered by the Community Development Office through a whistleblower. Cause and Effect - Due to the nature of the Emergency Rental Assistance Program, applicants are able to self-certify that they meet a large portion of the program?s eligibility requirements. The applicant falsified documentation to appear eligible to receive funding from the program. Program management had established adequate internal controls over the program and properly processed the application under the guidance of the Federal Program. However, self-certification makes it difficult to detect fraudulent applications. The result was the program made unallowable payments. Questioned Costs and Prevalence - An investigation is currently ongoing, but management believes that fraudulent disbursements to the applicant are between $25,000 and $160,000. Management has not identified any additional fraudulent payments and believes this to be an isolated incident. Recommendations - We recommend that management establish a process to identify applicants who have received a high level of funding from the program and determine their reasonableness prior to issuing future payments. Management?s Response - We concur with the recommendations and have implemented additional steps in the fraud prevention procedures previously implemented for this program.