Emergency Rental Assistance Audit Housing and Community Development Department of Development January 1, 2023- December 31, 2023

The Department of Internal Auditing (DIA) has conducted an audit of the Housing and CommunityDevelopment (HCD) and the Emergency Rental Assistance Program (ERA) for the period January1, 2023 – December 31, 2023. Our main objectives were to assess progress on any action plansdeveloped in response to findings and recommendations by federal and state audits and assessthe effectiveness and adequacy of policy, procedures, and controls in mitigating the risk of fraud,waste, and abuse for the ERA Program. To accomplish the first objective, we identified relevant audit reports by consulting with HCD andsearching federal and state agency websites. Additionally, we conducted substantive testing byreviewing the action plans and requesting support documentation to verify that the audit findingswere addressed adequately through timely corrective action. For the second objective, weresearched ERA program requirements, federal Uniform Guidance, and grant management bestpractices. DIA also conducted interviews, requested documentation, and performed sufficienttesting to assess the adequacy of HCD’s policies, procedures, and controls relative to mitigatingfraud, waste, and abuse. Additionally, DIA determined it necessary to expand the scope of theaudit to include additional, but limited, testing of provider payments to ensure rates paidcomplied with terms of applicable contracts. This additional testing included payments made bydepartments such as Department of Development (DOD), Juvenile Court, and Department ofPublic Safety & Justice Services. Our audit procedures disclosed internal control weaknesses related to corrective action on auditfindings, departmental policies and procedures including subrecipient monitoring and reportingaccuracy, advanced funds monitoring and reconciliations, and compliance with billing terms incontracts. This report provides the details of our findings. We are confident corrective action hasbeen or will be taken to mitigate the risks identified in this audit report. DIA provided HCD management with recommendations for improvinginternal controls. Additionally, DIA provided recommendations to theDoD, County Department of Purchasing (DoP), and County Fiscal Office.Based on management responses, we believe corrective action will betaken to mitigate the risks identified. Management responses follow eachrecommendation in the report. DIA recommended implementing thefollowing to HCD:  Implement a robust subrecipient monitoring program that will ensureERA program compliance and effectively mitigate the risks of fraud, waste,and abuse.  Establish a control that ensures the accuracy of invoices, adherence tocontract terms and billable rates, and detects overpayments. HCD andDoD should obtain refunds or credits as appropriate for theoverpayments totaling $173,139 and $10,400, respectively, caused byinconsistencies in billable rates.  Ensure that material changes to contracts, such as rate changes andretroactive application, are supported for their reasonableness andadequately disclosed to the approving authority (Council/Board ofControl).  Implement controls to ensure that subaward reconciliations of advancedfunds are performed timely using standardized forms, reviewed by asupervisor, and accompanied by supporting documentation to facilitatereviews and audits.  Establish controls to ensure ERA reporting compliance: o Ensure the accuracy of reporting and eligible expenditures in ERAreports through a review process that identifies and correctsdiscrepancies. o Submit quarterly ERA reports to the U.S. Treasury by themandated deadlines. o Submit quarterly ERA reports to the County’s Fiscal Office forsecondary review.