Finding 626048 (2022-004)

Significant Deficiency
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-03-29
Audit: 42245
Auditor: Cla LLP

AI Summary

  • Core Issue: The Illinois Housing Development Authority (IHDA) did not execute required intergovernmental agreements with state agencies before receiving COVID-19 funding.
  • Impacted Requirements: This oversight violates Uniform Guidance, which mandates formal agreements to ensure compliance and proper fund management.
  • Recommended Follow-Up: IHDA should secure intergovernmental agreements before future funding and implement new policies to enhance internal controls.

Finding Text

Finding 2022-004 ? Failure to Execute Intergovernmental Agreements Federal Agency: U.S. Department of the Treasury (Passed through the State of Illinois) Federal Program Name: COVID-19 Homeowner Assistance Fund (HAF) / COVID-19 State and Local Fiscal Recovery Funds (SLFRF) Assistance Listing Numbers: 21.026 / 21.027 Federal Award Information Number and Year: None Award Period: July 1, 2021, to June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance CRITERIA OR SPECIFIC REQUIREMENT Uniform Guidance (2 CFR section 200.1) defines a subrecipient as `an entity, usually but not limited to nonfederal entities, that receives a subaward from a pass-through entity to carry out part of a federal award.? This relationship between pass-through entity and subrecipient must be formalized in a written agreement communicating the identification of the federal award, as well as all requirements imposed by the pass-through entity. The Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal control should include procedures to ensure agreements are in place between pass-through entity?s and subrecipients before funding is received and programs carried out. CONDITION The Illinois Housing Development Authority (IHDA, or the Authority) did not execute an intergovernmental agreement with other State of Illinois agencies before being subgranted funding for the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) and Housing Assistance Fund (HAF) programs. QUESTIONED COSTS: None CONTEXT During our testwork over the SLFRF and HAF programs, we requested IHDA provide us with the grant agreement / subrecipient agreements between IHDA and other State of Illinois agencies who passed through SLFRF and HAF funding to the Authority during fiscal year 2022. After discussion with Authority management, we learned that no such subrecipient agreements / intergovernmental agreements were executed for the SLFRF and HAF funding IHDA received. CAUSE Authority?s management stated during fiscal year 2022, at the height of the COVID-19 pandemic and in order to disburse emergency funding as quickly as possible, the Authority and the Illinois Department of Revenue followed the existing written internal control processes and procedures in place between the agencies with respect to drawing HAF and SLFRF money from Fund 286 in order to operate the programs. EFFECT Failure to notify subrecipients of all required federal award information could result in subrecipients improperly omitting expenditures from their schedules of expenditures of federal awards, expending federal funds for unallowable purposes, or not receiving a single audit in accordance with Uniform Grant Guidance. Additionally, failure to formalize agreements between entities could lead to disputes as to who was responsible for carrying out federal programs. (Finding Code No. 2022-004) RECOMMENDATION We recommend the Authority obtain intergovernmental agreements with other State of Illinois agencies before being subgranted funding. AUTHORITY RESPONSE The Authority is in the process of working with Illinois Department of Revenue to obtain an agreement for fiscal year 2023. Unless extraneous circumstances prevent the Authority from obtaining an agreement in a timely manner, the Authority will ensure intergovernmental agreements exist before commencing new program administration. The Authority will implement new policies and procedures to strengthen control.

Categories

Subrecipient Monitoring Allowable Costs / Cost Principles Significant Deficiency

Other Findings in this Audit

  • 49602 2022-003
    Significant Deficiency Repeat
  • 49603 2022-003
    Significant Deficiency Repeat
  • 49604 2022-004
    Significant Deficiency
  • 49605 2022-004
    Significant Deficiency
  • 49606 2022-004
    Significant Deficiency
  • 49607 2022-004
    Significant Deficiency
  • 49608 2022-004
    Significant Deficiency
  • 626044 2022-003
    Significant Deficiency Repeat
  • 626045 2022-003
    Significant Deficiency Repeat
  • 626046 2022-004
    Significant Deficiency
  • 626047 2022-004
    Significant Deficiency
  • 626049 2022-004
    Significant Deficiency
  • 626050 2022-004
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.023 Emergency Rental Assistance Program $18.41M
14.182 Section 8 New Construction and Substantial Rehabilitation $16.47M
14.275 Housing Trust Fund $9.62M
14.239 Home Investment Partnerships Program $9.26M
14.856 Lower Income Housing Assistance Program_section 8 Moderate Rehabilitation $2.63M
14.326 Project Rental Assistance Demonstration (pra Demo) Program of Section 811 Supportive Housing for Persons with Disabilities $1.42M
21.026 Homeowner Assistance Fund $1.36M
21.027 Coronavirus State and Local Fiscal Recovery Funds $145,985
14.239 Covid-19 Home Investment Partnerships Program - Arp $45,866
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $26,783