ETOWAH HOUSING AUTHORITYLocal Government

ETOWAH HOUSING AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED SEPTEMBER 30, 2019 30 2019-001 Low Rent Public Housing Program ? Allowable Costs/Cost Principles Condition and Criteria: In accordance with the cost principles under 2 CFR part 200, subpart E, costs must be necessary and reasonable for the performance of the Federal award, conform to any limitations or exclusions set forth in 2 CFR part 200, subpart E, and be adequately documented. During our audit, it was determined that internal control deficiencies over compliance existed related to the Authority?s compliance with the Low Rent Public Housing Program?s allowable costs/cost principles compliance provisions. Identified control and compliance deviations included costs that were considered unallowable. These costs are not considered necessary and reasonable. Amount of Questioned Costs: $1,373 Context: Of the 40 disbursements tested, known questioned costs included unallowable costs that were determined to be not necessary and reasonable (4 out of 40). These unallowable costs included incurred IRS penalties and food/meals for board members/employees. The total amount of costs tested for the audit totaled $34,375. Known questioned costs therefore constituted 3.99% of the total costs tested. In extrapolating the questioned costs to determine the likely questioned costs, we took the total of all relevant expense types included in our sample in the Low Rent Public Housing Program amounting to $276,917 and multiplied this number by the 3.99%. The total likely questioned costs therefore amounted to $11,059. As a result of the likely questioned costs exceeding $10,000, the known questioned costs of $1,373 has been reported Cause: The Authority?s management?s internal controls over the Low Rent Public Housing Program?s allowable costs/cost principles compliance provision that were in place were deficient. Staff who had the ability to make purchases and procure contracts did not adequately follow the cost principles included in 2 CFR part 200, subpart E, and therefore the Authority incurred costs were unallowable. Effect: The Authority incurred costs that were unallowable and that were not necessary or reasonable. These internal control deficiencies could result in a possibility that errors or irregularities relating to costs can exist and not be detected by the Authority?s internal controls. Auditor?s Recommendation: The Authority?s management should ensure that all employees with the ability to purchase or procure goods and services keep a copy of 2 CFR 200, subpart E, the cost principles circular as an aid in determining whether potential costs are allowable or unallowable. Controls should be implemented to prevent incurring IRS penalties and to avoid incurring expenses for meals or food for board members and employees. Grantee Response: The Executive Director acknowledges the finding and will follow the auditor?s recommendation.

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