Finding Text
U.S. Department of Housing and Urban Development
Federal Financial Assistance Listing #14.134
Mortgage Insurance Rental Housing
Project Number: 091-11022
HUD Regulatory Agreement Dated July 1, 2016
Special Test and Provisions: Property, Operations and Distributions
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 property, operations, and distributions detected one instance where a disbursement of Project funds was not supported with a detailed receipt.
Cause: There was a lapse in oversight of the internal control process designed to ensure disbursement of Project funds are adequately supported.
Effect: Inadequate controls over this area of compliance may result in a reasonable possibility that the Project would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner.
Questioned Costs: $15
Context/Sampling: A nonstatistical sample of 60 out of more than 250 payroll and nonpayroll disbursements, were selected for testing, which accounted for approximately $150,800 out of approximately $1,496,000 of disbursements.
Repeat Finding from Prior Year: No
Recommendation: We recommend management review policies and procedures with applicable employees and remind them of the importance of established review and monitoring processes to ensure detailed receipts are retained to support disbursements of funds.
Views of Responsible Officials: Management agrees with the finding and recommendation.