LINCOLN COMMUNITY FOUNDATION INC

Identification data: Department of Housing and Urban Development, COVID-19 Community Development Block Grants/Entitlements Grants, Assistance Listing No. 14.218, Award Period March 3, 2021 through March 2, 2022 and Pass through entity is the City of Lincoln. Criteria: 2 CFR part 230/A-112 requires the Foundation to comply with specific cost principles, where the Foundation is required to use the funds for allowable costs. Condition: Certain costs of the program were paid to participants that did not meet the low- or moderate-income limits established in accordance with the regulations. Cause: A breakdown in the Foundation?s internal controls over allowable costs did not allow the Foundation to fully comply with the cost principles. Effect or potential effect: The Foundation may have received funds for unallowed costs. Questioned cost: We audited 40 files or $118,364 of expenditures, which were selected based on statistical sampling. Of the files tested, six did not have documentation to support that the participant met the low- or moderate-income requirements, which resulted in questioned costs of $5,428. This amount was determined by totaling the amount paid on behalf of each participant that did not meet the low- or moderate-income requirements. Additionally, based on the questioned costs identified in the audited files, a projection was performed for the total population of services provided to all participants in the program during the year. Of the total population amount of $1,040,746, likely questioned costs based on the projection were $47,727. Recommendation: The Foundation should implement an internal control system that allows for only allowable costs under the program. Views of responsible officials: The Foundation plans to implement controls to properly verify payments for assistance are only for low- or moderate-income individuals affected by COVID-19.

Corrective Action Planned: The Foundation will incorporate controls to ensure that federal funds are only used for allowable costs of individuals that meet the low or moderate-income requirements. The files will be reviewed to ensure that all required documentation is maintained and proper determination of low- or moderate-income of participants has been made. In addition, staff will be cross-trained on the income determination process and will review/sign off on each report before a request for payment is sent. Anticipated Completion Date: December 31, 2022. Responsible Parties: Management and Board of Directors