Finding Text
Material Weakness in Internal Control over Compliance - Appropriate Internal Control Structure Related to Compliance Requirements.Recommendation: See finding 2022-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation.
See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Agency must, among other things, “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)”.
Condition and Context: This finding has a pervasive effect on the Agency’s ability to maintain compliance over its award programs. The condition and context described in finding 2022-001 also relates to this finding. In addition to the condition and context noted above the following deficiencies were identified which stemmed from the deficiencies noted above and had an impact solely on internal control over compliance.
a) Existing compliance requirements are not appropriately reviewed by management.
i) Review was not completed to support tenants waitlist progression through the Housing Choice Voucher program.
ii) Housing Choice Voucher tenant files are not appropriately reviewed to ensure documentation retained supports compliance requirements.
iii) HUD reporting is not regularly reconciled to the trial balance.
iv) Lack of controls in place to prevent transfers and use of restricted funds for unallowable purposes.
This finding is a repeat finding of 2021-003 and 2020-003.
Cause and Effect: As detailed above in finding 2022-001, in our opinion, the predominate reason for the finding is due to the lack of appropriate oversight in the finance department and the finance department not following the written policies of the Agency do to staffing constraints. The material weakness resulted in the noncompliance findings described below.