HOMEWARD PIKES PEAK

Application of Rent Reasonableness Standards Significant deficiency U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ALN # : 14.267 Federal Award ID #'s: CO0083L8T042315, CO0083L8T042416, CO0110L8T042312, CO0110L8T042413, CO0061L8T042316, CO0061L8T042417. Condition: Rent was charged in excess of what was charged for other comparable units. Criteria: 2 CFR 578.51(g) requires that rents charged under the Continuum of Care Program not exceed rents currently being charged by the same owner for comparable unassisted units. Condition: Rent was charged in excess of what was charged for other comparable units. Questioned costs: $547. Context: As a result of audit procedures performed over rent reasonableness determinations, auditors identified 4 instances out of 37 clients tested in which the Organization’s rent reasonableness standard was not applied appropriately as amounts charged to the agency exceeded HPP's documentation of what was charged for other comparable units. Cause: While the Organization established controls to ensure amounts did not exceed HUD FMR's, they did not perform and maintain documentation over established rent reasonableness standards when evaluating comparable units. Effect: Amounts could be charged to the grant agreements that exceed what is charged for other comparable unassisted units, leading to questioned costs. Recommendation: Auditors recommend that management strengthen its review of rent reasonableness assessments to ensure that comparable unit data, market analyses, and approval steps support compliance with applicable program standards and documentation is maintained, and that such reviews be performed, where feasible, by an individual independent of the preparer to promote consistency and oversight. View of Responsible Official and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

Preparation of and Internal Controls Over Monthly Invoicing and SEFA Preparation Significant deficiency

Condition: As a result of our audit procedures and review of the SEFA, we proposed adjustments to the SEFA, which resulted in a material change in total expenditures of federal awards. Additionally, for two months, the Organization didn't update costs incurred to be billed to the federal government on their monthly invoicing.

Criteria: 2 CFR Part 200

Cause: There was not an independent review of the SEFA by someone other than the preparer.

Effect: Audit adjustments were required for the SEFA to be materially correct in accordance with 2 CFR Part 200.510(b).

Recommendation: We recommend that prior to sending the SEFA to the auditors, management perform a detailed review of the SEFA, general ledger, and monthly invoicing spreadsheets for each federal program included on the SEFA, to ensure the reports are consistent and the SEFA is complete and accurate. If possible, this review should be completed by an individual who did not prepare the SEFA.

View of Responsible Official and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

Reconciliation of Grants Receivable Significant deficiency

Condition: As a result of our audit procedures, we proposed adjustments to grants receivable, which resulted in a material change in grants receivable and revenue recognized during the period under audit.

Criteria: Adequate internal control functions over the financial reporting process.

Cause: The Organization changed accounting software during the year and had difficulty reconciling the account between the two software systems. Additionally, there was not an independent review of grants receivable by someone other than the preparer.

Effect: Misstatement of the Organization's financial statements will not be prevented, or detected and corrected, on a timely basis.

Recommendation: We recommend that the receivable ledger be reconciled to the general ledger on a monthly basis. Any differences should be investigated and resolved as soon as possible, and there should be an independent review of the reconciliation. This practice serves as a check on the accuracy of the record keeping process and maintains the accounts receivable on a more timely and accurate basis.

View of Responsible Official and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

DEPARTMENT OF EDUCATION Continuum of Care Program - Grant No. CO0083L8T042113, Grant Period September 1, 2022 - August 31, 2023; Grant No. CO0061L8T042114, Grant Period July 1, 2022 - June 30, 2023 Condition: Significant Deficiency - A rental rate comparison to HUD published fair market rents was not performed for one tenant out of the 37 cases selected for testing. Criteria: 24 CFR Questioned costs: $0 Context: Where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Cause: The Organization was unable to provide a manager approved rental rate comparison due to turnover within the Organization. Effect: Tenant could be paying above market rent and/or HUD reimbursing the Organization for more than they should be in accordance with HUD-determined fair market rents. Repeat finding: (2022-001). Recommendation: HPP needs to complete an annual rent reasonableness calculation for all tenants. This should be completed by a case manager, and the tenant file reviewed independently by the Director of Housing. View of Responsible Official and Planned Corrective Action: Management agrees with the finding. See corrective action plan.