Audit 10852

Findings and Questioned Costs Related to the Audit of Federal Awards Finding: 2023‐002 U.S. Department of Housing & Urban Development Program Name: Public Housing Operating Fund AL Number: 14.850 Material Weakness, Procurement and Suspension and Debarment Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that procurement policies are implemented and functioning as intended. Management must monitor activities under federal awards to assure compliance with federal requirements. Condition: The City implemented procurement policies that conforms with applicable federal and state laws. However, the City’s internal controls over micro-purchases were not functioning as intended. Context: During our testing, we examined 9 purchases and determined that 7 purchases in the micro-purchases threshold did not follow the City’s policy. Expenditures were pre-audited prior to payment; however purchase orders were not completed as required by the City’s policy. Effect: Purchases may be made without the proper procurement approvals. Cause: Due to the turnover in the housing department, there were instances where a proper purchase order was not created for approval. Identification of a Repeat Finding: This is a modified, repeat finding from the immediate previous audit, 2022-003. Questioned Cost: None. This finding represents an internal control issue; therefore, questioned costs are not applicable. Recommendation: The City should have a system in place to ensure that the procurement policies are implemented and functioning as intended. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

Findings and Questioned Costs Related to the Audit of Federal Awards (continued) Finding: 2023‐003 U.S. Department of Housing & Urban Development Program Name: Public Housing Operating Fund AL Number: 14.850 Non-Material Non‐Compliance Material Weakness, Eligibility Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that applicants have all required documentation in their file. In accordance with 24 CFR Part 5 Subpart F, the City must maintain documentation to support tenant eligibility. Condition: The Public Housing Department did not follow procedures to ensure the proper eligibility determination were made and documented. Context: Of the 185 applicants during the current year valued at $749,487, we examined 37 (valued at $133,566) and determined that 1 (1% valued at $3,610) applicant was not supported with case documentation to confirm eligibility. We also determined that two applicants (6% valued at $7,220) had inconsistent documentation supporting eligibility determination in the case file. Upon further review, these two applicants were deemed eligible. Effect: Participants could receive benefits for which they are not eligible. Cause: Weakness in implementation of controls over eligibility procedures. Due to the turnover in the housing department, the City failed to obtain or retain the completed eligibility documentation. Identification of a Repeat Finding: This is a modified, repeat finding from the immediate previous audit, 2022-004. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Even though the sample results only identified $3,610 in questioned costs, if tests were extended to the entire population, questioned costs could exceed $25,000. Recommendation: Management should adhere to the program’s policy and maintain proper eligibility documentation in the applicant’s file. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

Findings and Questioned Costs Related to the Audit of Federal Awards (continued) Finding: 2023‐004 U.S. Department of Housing & Urban Development Program Name: Public Housing Operating Fund AL Number: 14.850 Material Non-Compliance Material Weakness, Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that activities allowed and allowable cost policies are implemented and functioning as intended. Management must monitor activities under federal awards to assure compliance with federal requirements. Management should have an adequate system of internal control procedures in place to properly review and assess the eligibility of payroll costs to ensure the accuracy of the payroll costs charged is within program requirements. In accordance with 24 CRF section 990, verification of accuracy of information used in determining payroll costs to be charged to the program should be maintained. Condition: Due to a network event, the disaster recovery plan was not sufficient to recover documents on a timely manner. As a result, the approved payroll time sheets were not recovered. Context: Of the 1,540 expenditures during the current year valued at $749,487, we examined 40 (valued at $134,796) and determined that 7 (18% valued at $13,369) expenditures did not have proper documentation to support accuracy of payroll costs. Effect: Salaries allocated to the program did not have approved time sheets to verify the accuracy of the hours charged. Cause: Due to the network event, the timesheets were not recovered. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Even though the sample results only identified $13,369 in known questioned costs, if tests were extended to the entire population, questioned costs could exceed $25,000. Recommendation: Management should strengthen internal control procedures over activities allowed and allowable costs and strengthen the disaster recovery plan. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

Findings and Questioned Costs Related to the Audit of Federal Awards Finding: 2023‐002 U.S. Department of Housing & Urban Development Program Name: Public Housing Operating Fund AL Number: 14.850 Material Weakness, Procurement and Suspension and Debarment Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that procurement policies are implemented and functioning as intended. Management must monitor activities under federal awards to assure compliance with federal requirements. Condition: The City implemented procurement policies that conforms with applicable federal and state laws. However, the City’s internal controls over micro-purchases were not functioning as intended. Context: During our testing, we examined 9 purchases and determined that 7 purchases in the micro-purchases threshold did not follow the City’s policy. Expenditures were pre-audited prior to payment; however purchase orders were not completed as required by the City’s policy. Effect: Purchases may be made without the proper procurement approvals. Cause: Due to the turnover in the housing department, there were instances where a proper purchase order was not created for approval. Identification of a Repeat Finding: This is a modified, repeat finding from the immediate previous audit, 2022-003. Questioned Cost: None. This finding represents an internal control issue; therefore, questioned costs are not applicable. Recommendation: The City should have a system in place to ensure that the procurement policies are implemented and functioning as intended. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

Findings and Questioned Costs Related to the Audit of Federal Awards (continued) Finding: 2023‐003 U.S. Department of Housing & Urban Development Program Name: Public Housing Operating Fund AL Number: 14.850 Non-Material Non‐Compliance Material Weakness, Eligibility Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that applicants have all required documentation in their file. In accordance with 24 CFR Part 5 Subpart F, the City must maintain documentation to support tenant eligibility. Condition: The Public Housing Department did not follow procedures to ensure the proper eligibility determination were made and documented. Context: Of the 185 applicants during the current year valued at $749,487, we examined 37 (valued at $133,566) and determined that 1 (1% valued at $3,610) applicant was not supported with case documentation to confirm eligibility. We also determined that two applicants (6% valued at $7,220) had inconsistent documentation supporting eligibility determination in the case file. Upon further review, these two applicants were deemed eligible. Effect: Participants could receive benefits for which they are not eligible. Cause: Weakness in implementation of controls over eligibility procedures. Due to the turnover in the housing department, the City failed to obtain or retain the completed eligibility documentation. Identification of a Repeat Finding: This is a modified, repeat finding from the immediate previous audit, 2022-004. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Even though the sample results only identified $3,610 in questioned costs, if tests were extended to the entire population, questioned costs could exceed $25,000. Recommendation: Management should adhere to the program’s policy and maintain proper eligibility documentation in the applicant’s file. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

Findings and Questioned Costs Related to the Audit of Federal Awards (continued) Finding: 2023‐004 U.S. Department of Housing & Urban Development Program Name: Public Housing Operating Fund AL Number: 14.850 Material Non-Compliance Material Weakness, Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that activities allowed and allowable cost policies are implemented and functioning as intended. Management must monitor activities under federal awards to assure compliance with federal requirements. Management should have an adequate system of internal control procedures in place to properly review and assess the eligibility of payroll costs to ensure the accuracy of the payroll costs charged is within program requirements. In accordance with 24 CRF section 990, verification of accuracy of information used in determining payroll costs to be charged to the program should be maintained. Condition: Due to a network event, the disaster recovery plan was not sufficient to recover documents on a timely manner. As a result, the approved payroll time sheets were not recovered. Context: Of the 1,540 expenditures during the current year valued at $749,487, we examined 40 (valued at $134,796) and determined that 7 (18% valued at $13,369) expenditures did not have proper documentation to support accuracy of payroll costs. Effect: Salaries allocated to the program did not have approved time sheets to verify the accuracy of the hours charged. Cause: Due to the network event, the timesheets were not recovered. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Even though the sample results only identified $13,369 in known questioned costs, if tests were extended to the entire population, questioned costs could exceed $25,000. Recommendation: Management should strengthen internal control procedures over activities allowed and allowable costs and strengthen the disaster recovery plan. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.