Finding 963164 (2023-007)

2023-007 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 internal personnel who created and approved fraudulent applications to the program. This situation was discovered by the Community Development Office through a review of end of period reports. Cause and Effect - Internal personnel colluded together to create and approve fraudulent applications to the program. These payments were set up to be paid directly to the internal personnel themselves or those related to them. Questioned Costs and Prevalence - An investigation is currently ongoing, but management believes that fraudulent disbursements to be approximately $154,500. Management has not identified any additional fraudulent payments related to this issue. Recommendations - We recommend that management establish a process to identify payments which contain known information of internal personnel to determine eligibility prior to issuing future payments. Management’s Response - We concur with the recommendations and have implemented a process to identify any payment requests connected to internal personnel and escalate these requests for director approval prior to payment being issued.