Finding Text
United States Department of the Treasury
Reference Number: 2023-006
Program: 21.026 COVID-19 Homeowner Assistance Fund Program
Federal Award Number: HAF0034
Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance
Compliance Requirement: Allowable Cost
Condition: Reconciliation of the HAF client assistance expenditures for the year ended June 30, 2023, revealed approximately $290,000 of federal funds were held by a vendor and were reported as federal expenditures. During the operation of the program, the vendor received refunds that were not timely remitted to DSHA or utilized to fund assistance. Criteria: The Uniform Guidance Cost Principles requires DSHA to offset credits against program expenditures in 2 CFR 200.406(a): Applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. Questioned Costs: $290,000. The funds held by the vendor were initially recorded as program costs. During the audit of the year ended June 30, 2023, program costs and revenue were reduced by an audit adjusting journal entry for the amount held by DSHA’s vendor. Effect: Unallowed costs were recorded to the Homeowner Assistance Fund Program during the year ended June 30, 2023. Cause: DSHA was notified by the vendor that a credit was available to be applied to fund future assistance. The vendor did not apply the credit without DSHA’s explicit approval. Recommendation: We recommend DSHA review the design and implementation of internal controls to address the identified weaknesses in internal control.