Finding Text
2022-002 U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.155 Section 223(f) Mortgage Insurance for the Purchase of Refinancing of Existing Multifamily Housing Projects Special Tests and Provisions: Property and Operations, Distributions, and Reimbursement of Advances Significant Deficiency in Internal Control over Compliance Criteria: 2 CRF 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Our testing of the use of Project funds detected one instance where an employee?s timesheet was not approved and one instance where an employee?s timesheet was approved after payroll; however, we were unable to determine whether the review occurred within a reasonable amount of time after the payroll period. Cause: There was a lapse in oversight of the internal control process designed to ensure timesheets are properly approved and approved within a reasonable amount of time after the payroll period. Effect: Lack of compliance with designed internal controls over use of Project funds could adversely affect the Project?s compliance with HUD regulations. Questioned Costs: $0 Context/Sampling: A nonstatistical sample of 60 of the Project?s 660 disbursements ($235,759 of $1,234,314 total disbursements), including payroll and non-payroll, was selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend the Project review policies and procedures with applicable employees and remind them of the importance of established review and monitoring processes. Views of Responsible Officials: Management agrees with the finding and the recommendation.