Finding Text
2023-002 Review and Approval of Project Expenditures (Significant Deficiency)
Federal Agency: Department of Housing and Urban Development
Program Name: Section 811 Supportive Housing for Person with Disabilities
Assistance Listing Number: 14.181
HUD Project Number: 102-HD018
Award period: Year ended June 30, 2023
Criteria: An effective internal control system exists if controls are effective in preventing or detecting material misstatements and potential fraudulent activities in the cash disbursement process. It provides reasonable assurance for the safeguarding of assets, the reliability of financial information and compliance with laws and regulations, including the Uniform Guidance.
Condition: We have determined that there was an inadequate design of internal control over the approval of project expenditures during the fiscal year ended June 30, 2023. We noted that, out of forty tested expenditures totaling $35,056, three expenditures totaling $840 did not show that evidence of approval of that expenditure was obtained.
Cause: The Organization’s policies and procedures were not designed to ensure that all project expenditures obtain proper approval and that evidence of that approval is maintained.
Effect: The Organization's lack of proper internal controls over approval of project expenditures increases the risk of material misstatements and potential fraudulent activities.
Recommendation: We recommend that the Organization obtain proper approval of all project expenditures and that evidence of that approval is documented and maintained.
Repeat Finding: Yes. Prior year reference number 2022-002.
Views of Responsible Officials and Planned Corrective Actions: Management acknowledges there is a control weakness as discussed above and will work to implement additional controls and reviews as recommended.