New Jersey Redevelopment AuthorityLocal Government

Finding 2020-001 Allowable Costs (Significant Deficiency): Criteria or Specific Requirement: The grant is designed to provide necessary funding to address unforeseen financial needs and risks created by the COVID-19 public health emergency. Governments may use grant payments for eligible expenses subject to the restrictions set forth in section 601(d) of the Social Security Act. Payments must be used to cover costs that are: ? Necessary expenditures incurred due to the public health emergency with respect to COVID?19; ? Not accounted for in the governments? most recently approved budget as of March 27, 2020; and ? Incurred during the period that begins on March 1, 2020 and ends on December 30, 2021 Condition: During our testing, we noted that the Authority did not have adequate internal controls designed to ensure all rental assistance amounts were properly calculated and reconciled to the supporting documents that were obtained as part of the Authority?s review of applications in determining the eligibility of landlords receiving emergency rental assistance. Questioned costs: $4,594 Known, $63,201 Likely. Context: 71 files were selected from a population of over 250 approved landlord rental assistance payments. Exceptions noted in 2 out of 71 instances tested where the amount of rental assistance provided did not agree to the supporting documentation, resulting in an overpayment of assistance. An additional 3 exceptions were noted out of 71 instances tested where the amount of rental assistance provided was underpaid based on the examination of the supporting documentation. Cause: The Authority?s internal controls over the review process of the rental assistance payments did not identify and correct the errors. Effect: The errors resulted in overpayment of rental assistance payments and questioned costs. Errors also occurred where applicants did not receive the full amount of assistance they were eligible for. Recommendation: The Authority should review its internal controls to ensure that all required eligibility documentation is properly reviewed and reconciled to the rental assistance payment prior to disbursement to the landlord. Management's Response: Your finding #2020-001 states ?During our testing, we noted that the Authority did not have adequate internal controls designed to ensure all rental assistance amounts were properly calculated and reconciled to the supporting documents that were obtained as part of the Authority?s review of applications in determining the eligibility of landlords receiving emergency rental assistance.? NJRA?s process for reviewing and reconciling program?s funds was detailed and performed on a regular basis. NJRA funded about $25 million, helping around 2,500 small businesses located within our eligible New Jersey communities. We continuously modified and improved our processes and strengthened our controls to minimize these risks and to maintain the integrity of the program. Some of the modification and improvements included: a) Hiring qualified and skilled individuals to oversee the program and to perform critical review tasks. Also, ensuring we had sufficient capacity to respond to the overwhelming number of applications received for the program. b) Procuring highly capable technology. c) Maintain open communication with our Deputy Attorney General for their guidance on matters of policy clarifications and issues with applicants. d) Implementing a process for review, identify and recoup funds when and where necessary and for reviewing failed payments, while ensuring that communications with business owners is responsive, sensible, and professional. e) Emphasizing transparency and accountability. NJRA maintains that our internal controls were adequate considering the speed at which we needed to respond to meet crucial financial needs of our small business community impacted by the pandemic.