Material Weakness in Internal Control over Compliance - Appropriate Internal Control Structure Related to Compliance Requirements.Recommendation: See finding 2022-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation.
See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Agency must, among other things, “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)”.
Condition and Context: This finding has a pervasive effect on the Agency’s ability to maintain compliance over its award programs. The condition and context described in finding 2022-001 also relates to this finding. In addition to the condition and context noted above the following deficiencies were identified which stemmed from the deficiencies noted above and had an impact solely on internal control over compliance.
a) Existing compliance requirements are not appropriately reviewed by management.
i) Review was not completed to support tenants waitlist progression through the Housing Choice Voucher program.
ii) Housing Choice Voucher tenant files are not appropriately reviewed to ensure documentation retained supports compliance requirements.
iii) HUD reporting is not regularly reconciled to the trial balance.
iv) Lack of controls in place to prevent transfers and use of restricted funds for unallowable purposes.
This finding is a repeat finding of 2021-003 and 2020-003.
Cause and Effect: As detailed above in finding 2022-001, in our opinion, the predominate reason for the finding is due to the lack of appropriate oversight in the finance department and the finance department not following the written policies of the Agency do to staffing constraints. The material weakness resulted in the noncompliance findings described below.
Criteria: 24 CFR 982.155 indicates Housing Choice Voucher Program (HCVP) administrative reserves must be used to pay program administrative expenses. HUD has indicated in PIH Notice 2005-01 HCVP administrative reserves are restricted solely for the HCVP and no other Agency administrative expenses.
Condition and Context: The Agency used HCVP administrative reserves to cover Agency payroll expenses during 2022 and through the date the financial statements were available to be issued. The Agency also made errors in initially recording restricted funds received in the general ledger which resulted in journal entries and bank transfers necessary to appropriately record amounts received. The specific HCVP administrative reserves used to cover non-HCVP Agency payroll expenses were advanced as noted below.
• $500,00 advanced on January 21, 2022. Amount not repaid as of the date the financial statements were available to be issued.
• $200,000 advanced on March 10, 2022. Amount not repaid as of the date the financial statements were available to be issued.
Cause and Effect: The predominate reason for the finding is due to cash flow concerns specific to payment of payroll and lack of controls surrounding transfer of funds from restricted accounts. This finding resulted in noncompliance with allowable use of HAP.
Known Questioned Costs: $700,000 of HCV administrative reserves used to non-HCVP cover payroll expenses during 2022.
Recommendation: See finding 2022-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: Management is responsible for maintaining appropriate documentation to substantiate tenant eligibility determinations and compliance with applicable special tests and provisions.
Condition and Context: We selected a sample of 60 tenant files for testing Eligibility; Reporting - Special Reporting HUD-50058, Family Report; and Special Tests and Provisions: Selection for Waiting List, Reasonable Rent, Housing Quality Standards Inspections, and Housing Assistance Payment. Our sample was not statistically valid. Of the items selected we noted the following:
1) 7 of the 60 tenant files selected for testing were not able to be located.
2) 11 of the 60 tenant files selected for testing were missing documentation related to housing quality standards inspections.
We also requested supporting documentation to show progression of tenants being moved through the waitlist and into the Housing Choice Voucher program. Management was unable to provide this information due to system limitations and lack of appropriate tracking of this data throughout the year.
This is a repeat finding of 2021-005, 2020-005 and 2019-005.
Cause and Effect: The seven missing tenant files resulted in an inability to make a determination on compliance for these tenants. Unsupported tenant eligibility determinations could impact future federal funding. The use of improper income related to eligibility resulted in noncompliance as relates to eligibility, rent reasonableness, and HAP. The inability to provide data to support the progression of the tenant waitlist resulted in an inability to make a determination on compliance for all tenants selected and could result in tenants being improperly added to the program.
Recommendation: We recommend the Agency review current procedures surrounding maintenance of tenant files and waitlists to ensure adequacy of the procedures in place and identify areas of improvement to establish and maintain adequate internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 24 CFR 982.404 requires public housing authorities to require an owner to correct any life-threatening deficiencies identified during housing quality standards (HQS) inspections within 24 hours of the inspection and all other HQS deficiencies within 30 days of the inspection or within a specifically approved extension. If deficiencies are not corrected in the required timeframe the public housing authority must abate HAPs beginning no later than the first of the month following the specified correction period or the HAP contract is to be terminated.
Condition and Context: We reviewed the 2022 failed inspection listing provided by management and selected a sample of 60 failed inspections for testing. Our sample was not statistically valid. We noted 11 properties that had multiple failed inspections which were not moved to abatement.
Recommendation: See finding 2022-001. Additionally, the auditor recommends the Agency review current procedures surrounding housing quality inspection standards to ensure accuracy of the procedures in place and identify areas of improvement to establish and maintain adequate internal control.
This is a repeat finding of 2021-007 and 2020-007.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs.
Condition and Context: We selected a sample of 20 different payroll entries related to time allocated to the Housing Choice Voucher program and requested supporting documentation for costs allocated to the grant. Our sample was not statistically valid. We reviewed payroll summary reports and paycheck detail to various programs, but noted that there were no timecards available for review or approval for any selection. It was noted that the payroll administrator was reviewing and approving the timecards, rather than a direct supervisor over the Section 8 program. Additionally, management indicated that timecards and payroll reports were not universally available due to system limitations and employee turnover.
Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance.
Recommendation: We recommend the review and approval of timecards be completed by a direct supervisor, that payroll records be regularly reviewed against timecards, and all supporting documentation for program costs be retained internally.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date
Criteria: HUD-52681-B is required to be submitted monthly electronically via the VMS. HUD relies on the audit of these key line items below to determine the reasonableness of the data submitted for the purpose of calculating funding under the program.
Condition and Context: We obtained a summary of monthly VMS reporting from management noting that the key line items were unable to be reconciled to the trial balance by management. Specifically, HAP expenses reported on the trial balance are overstated by $3,530,690 relative to the HUD reporting.
Cause and Effect: As described in 2022-001, the Agency has not maintained appropriate internal controls over compliance. Lack of regular reconciliation of HAP expenses to the HUD reporting referenced above resulted in the inability to reconcile at year end.
Recommendation: We recommend that monthly VMS reporting be reconciled to the trial balance to ensure accurate reporting.
This is a repeat finding of 2021-010.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs.
Condition and Context: During our testing of expenditures obligated during the year, we were made aware of the fact that management had invertedly duplicated a draw of funds totaling $303,024.92. This error was not discovered until several months after the fact.
Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance.
Recommendation: See finding 2022-001, specifically the recommendation relating to appropriate oversight in the finance department. We recommend that the finance department continue to hire and train its employees on various programmatic requirements and resources, to ensure compliance with both existing and new federal compliance requirements.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs.
Condition and Context: We selected a sample of 12 different program related disbursement and requested supporting documentation for costs allocated to the grant. Our sample was not statistically valid. We reviewed invoice and payment detail to for each selection, but noted that there were no POs available for review or approval for any selection.
Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance.
Recommendation: See finding 2022-001, specifically the recommendation relating to appropriate oversight in the finance department. We recommend that the finance department continue to hire and train its employees on various programmatic requirements and resources, to ensure compliance with both existing and new federal compliance requirements.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Material Weakness in Internal Control over Compliance - Appropriate Internal Control Structure Related to Compliance Requirements.Recommendation: See finding 2022-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation.
See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Agency must, among other things, “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)”.
Condition and Context: This finding has a pervasive effect on the Agency’s ability to maintain compliance over its award programs. The condition and context described in finding 2022-001 also relates to this finding. In addition to the condition and context noted above the following deficiencies were identified which stemmed from the deficiencies noted above and had an impact solely on internal control over compliance.
a) Existing compliance requirements are not appropriately reviewed by management.
i) Review was not completed to support tenants waitlist progression through the Housing Choice Voucher program.
ii) Housing Choice Voucher tenant files are not appropriately reviewed to ensure documentation retained supports compliance requirements.
iii) HUD reporting is not regularly reconciled to the trial balance.
iv) Lack of controls in place to prevent transfers and use of restricted funds for unallowable purposes.
This finding is a repeat finding of 2021-003 and 2020-003.
Cause and Effect: As detailed above in finding 2022-001, in our opinion, the predominate reason for the finding is due to the lack of appropriate oversight in the finance department and the finance department not following the written policies of the Agency do to staffing constraints. The material weakness resulted in the noncompliance findings described below.
Criteria: 24 CFR 982.155 indicates Housing Choice Voucher Program (HCVP) administrative reserves must be used to pay program administrative expenses. HUD has indicated in PIH Notice 2005-01 HCVP administrative reserves are restricted solely for the HCVP and no other Agency administrative expenses.
Condition and Context: The Agency used HCVP administrative reserves to cover Agency payroll expenses during 2022 and through the date the financial statements were available to be issued. The Agency also made errors in initially recording restricted funds received in the general ledger which resulted in journal entries and bank transfers necessary to appropriately record amounts received. The specific HCVP administrative reserves used to cover non-HCVP Agency payroll expenses were advanced as noted below.
• $500,00 advanced on January 21, 2022. Amount not repaid as of the date the financial statements were available to be issued.
• $200,000 advanced on March 10, 2022. Amount not repaid as of the date the financial statements were available to be issued.
Cause and Effect: The predominate reason for the finding is due to cash flow concerns specific to payment of payroll and lack of controls surrounding transfer of funds from restricted accounts. This finding resulted in noncompliance with allowable use of HAP.
Known Questioned Costs: $700,000 of HCV administrative reserves used to non-HCVP cover payroll expenses during 2022.
Recommendation: See finding 2022-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: Management is responsible for maintaining appropriate documentation to substantiate tenant eligibility determinations and compliance with applicable special tests and provisions.
Condition and Context: We selected a sample of 60 tenant files for testing Eligibility; Reporting - Special Reporting HUD-50058, Family Report; and Special Tests and Provisions: Selection for Waiting List, Reasonable Rent, Housing Quality Standards Inspections, and Housing Assistance Payment. Our sample was not statistically valid. Of the items selected we noted the following:
1) 7 of the 60 tenant files selected for testing were not able to be located.
2) 11 of the 60 tenant files selected for testing were missing documentation related to housing quality standards inspections.
We also requested supporting documentation to show progression of tenants being moved through the waitlist and into the Housing Choice Voucher program. Management was unable to provide this information due to system limitations and lack of appropriate tracking of this data throughout the year.
This is a repeat finding of 2021-005, 2020-005 and 2019-005.
Cause and Effect: The seven missing tenant files resulted in an inability to make a determination on compliance for these tenants. Unsupported tenant eligibility determinations could impact future federal funding. The use of improper income related to eligibility resulted in noncompliance as relates to eligibility, rent reasonableness, and HAP. The inability to provide data to support the progression of the tenant waitlist resulted in an inability to make a determination on compliance for all tenants selected and could result in tenants being improperly added to the program.
Recommendation: We recommend the Agency review current procedures surrounding maintenance of tenant files and waitlists to ensure adequacy of the procedures in place and identify areas of improvement to establish and maintain adequate internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 24 CFR 982.404 requires public housing authorities to require an owner to correct any life-threatening deficiencies identified during housing quality standards (HQS) inspections within 24 hours of the inspection and all other HQS deficiencies within 30 days of the inspection or within a specifically approved extension. If deficiencies are not corrected in the required timeframe the public housing authority must abate HAPs beginning no later than the first of the month following the specified correction period or the HAP contract is to be terminated.
Condition and Context: We reviewed the 2022 failed inspection listing provided by management and selected a sample of 60 failed inspections for testing. Our sample was not statistically valid. We noted 11 properties that had multiple failed inspections which were not moved to abatement.
Recommendation: See finding 2022-001. Additionally, the auditor recommends the Agency review current procedures surrounding housing quality inspection standards to ensure accuracy of the procedures in place and identify areas of improvement to establish and maintain adequate internal control.
This is a repeat finding of 2021-007 and 2020-007.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs.
Condition and Context: We selected a sample of 20 different payroll entries related to time allocated to the Housing Choice Voucher program and requested supporting documentation for costs allocated to the grant. Our sample was not statistically valid. We reviewed payroll summary reports and paycheck detail to various programs, but noted that there were no timecards available for review or approval for any selection. It was noted that the payroll administrator was reviewing and approving the timecards, rather than a direct supervisor over the Section 8 program. Additionally, management indicated that timecards and payroll reports were not universally available due to system limitations and employee turnover.
Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance.
Recommendation: We recommend the review and approval of timecards be completed by a direct supervisor, that payroll records be regularly reviewed against timecards, and all supporting documentation for program costs be retained internally.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date
Criteria: HUD-52681-B is required to be submitted monthly electronically via the VMS. HUD relies on the audit of these key line items below to determine the reasonableness of the data submitted for the purpose of calculating funding under the program.
Condition and Context: We obtained a summary of monthly VMS reporting from management noting that the key line items were unable to be reconciled to the trial balance by management. Specifically, HAP expenses reported on the trial balance are overstated by $3,530,690 relative to the HUD reporting.
Cause and Effect: As described in 2022-001, the Agency has not maintained appropriate internal controls over compliance. Lack of regular reconciliation of HAP expenses to the HUD reporting referenced above resulted in the inability to reconcile at year end.
Recommendation: We recommend that monthly VMS reporting be reconciled to the trial balance to ensure accurate reporting.
This is a repeat finding of 2021-010.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Material Weakness in Internal Control over Compliance - Appropriate Internal Control Structure Related to Compliance Requirements.Recommendation: See finding 2022-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation.
See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Agency must, among other things, “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)”.
Condition and Context: This finding has a pervasive effect on the Agency’s ability to maintain compliance over its award programs. The condition and context described in finding 2022-001 also relates to this finding. In addition to the condition and context noted above the following deficiencies were identified which stemmed from the deficiencies noted above and had an impact solely on internal control over compliance.
a) Existing compliance requirements are not appropriately reviewed by management.
i) Review was not completed to support tenants waitlist progression through the Housing Choice Voucher program.
ii) Housing Choice Voucher tenant files are not appropriately reviewed to ensure documentation retained supports compliance requirements.
iii) HUD reporting is not regularly reconciled to the trial balance.
iv) Lack of controls in place to prevent transfers and use of restricted funds for unallowable purposes.
This finding is a repeat finding of 2021-003 and 2020-003.
Cause and Effect: As detailed above in finding 2022-001, in our opinion, the predominate reason for the finding is due to the lack of appropriate oversight in the finance department and the finance department not following the written policies of the Agency do to staffing constraints. The material weakness resulted in the noncompliance findings described below.
Criteria: 24 CFR 982.155 indicates Housing Choice Voucher Program (HCVP) administrative reserves must be used to pay program administrative expenses. HUD has indicated in PIH Notice 2005-01 HCVP administrative reserves are restricted solely for the HCVP and no other Agency administrative expenses.
Condition and Context: The Agency used HCVP administrative reserves to cover Agency payroll expenses during 2022 and through the date the financial statements were available to be issued. The Agency also made errors in initially recording restricted funds received in the general ledger which resulted in journal entries and bank transfers necessary to appropriately record amounts received. The specific HCVP administrative reserves used to cover non-HCVP Agency payroll expenses were advanced as noted below.
• $500,00 advanced on January 21, 2022. Amount not repaid as of the date the financial statements were available to be issued.
• $200,000 advanced on March 10, 2022. Amount not repaid as of the date the financial statements were available to be issued.
Cause and Effect: The predominate reason for the finding is due to cash flow concerns specific to payment of payroll and lack of controls surrounding transfer of funds from restricted accounts. This finding resulted in noncompliance with allowable use of HAP.
Known Questioned Costs: $700,000 of HCV administrative reserves used to non-HCVP cover payroll expenses during 2022.
Recommendation: See finding 2022-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: Management is responsible for maintaining appropriate documentation to substantiate tenant eligibility determinations and compliance with applicable special tests and provisions.
Condition and Context: We selected a sample of 60 tenant files for testing Eligibility; Reporting - Special Reporting HUD-50058, Family Report; and Special Tests and Provisions: Selection for Waiting List, Reasonable Rent, Housing Quality Standards Inspections, and Housing Assistance Payment. Our sample was not statistically valid. Of the items selected we noted the following:
1) 7 of the 60 tenant files selected for testing were not able to be located.
2) 11 of the 60 tenant files selected for testing were missing documentation related to housing quality standards inspections.
We also requested supporting documentation to show progression of tenants being moved through the waitlist and into the Housing Choice Voucher program. Management was unable to provide this information due to system limitations and lack of appropriate tracking of this data throughout the year.
This is a repeat finding of 2021-005, 2020-005 and 2019-005.
Cause and Effect: The seven missing tenant files resulted in an inability to make a determination on compliance for these tenants. Unsupported tenant eligibility determinations could impact future federal funding. The use of improper income related to eligibility resulted in noncompliance as relates to eligibility, rent reasonableness, and HAP. The inability to provide data to support the progression of the tenant waitlist resulted in an inability to make a determination on compliance for all tenants selected and could result in tenants being improperly added to the program.
Recommendation: We recommend the Agency review current procedures surrounding maintenance of tenant files and waitlists to ensure adequacy of the procedures in place and identify areas of improvement to establish and maintain adequate internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 24 CFR 982.404 requires public housing authorities to require an owner to correct any life-threatening deficiencies identified during housing quality standards (HQS) inspections within 24 hours of the inspection and all other HQS deficiencies within 30 days of the inspection or within a specifically approved extension. If deficiencies are not corrected in the required timeframe the public housing authority must abate HAPs beginning no later than the first of the month following the specified correction period or the HAP contract is to be terminated.
Condition and Context: We reviewed the 2022 failed inspection listing provided by management and selected a sample of 60 failed inspections for testing. Our sample was not statistically valid. We noted 11 properties that had multiple failed inspections which were not moved to abatement.
Recommendation: See finding 2022-001. Additionally, the auditor recommends the Agency review current procedures surrounding housing quality inspection standards to ensure accuracy of the procedures in place and identify areas of improvement to establish and maintain adequate internal control.
This is a repeat finding of 2021-007 and 2020-007.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs.
Condition and Context: We selected a sample of 20 different payroll entries related to time allocated to the Housing Choice Voucher program and requested supporting documentation for costs allocated to the grant. Our sample was not statistically valid. We reviewed payroll summary reports and paycheck detail to various programs, but noted that there were no timecards available for review or approval for any selection. It was noted that the payroll administrator was reviewing and approving the timecards, rather than a direct supervisor over the Section 8 program. Additionally, management indicated that timecards and payroll reports were not universally available due to system limitations and employee turnover.
Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance.
Recommendation: We recommend the review and approval of timecards be completed by a direct supervisor, that payroll records be regularly reviewed against timecards, and all supporting documentation for program costs be retained internally.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date
Criteria: HUD-52681-B is required to be submitted monthly electronically via the VMS. HUD relies on the audit of these key line items below to determine the reasonableness of the data submitted for the purpose of calculating funding under the program.
Condition and Context: We obtained a summary of monthly VMS reporting from management noting that the key line items were unable to be reconciled to the trial balance by management. Specifically, HAP expenses reported on the trial balance are overstated by $3,530,690 relative to the HUD reporting.
Cause and Effect: As described in 2022-001, the Agency has not maintained appropriate internal controls over compliance. Lack of regular reconciliation of HAP expenses to the HUD reporting referenced above resulted in the inability to reconcile at year end.
Recommendation: We recommend that monthly VMS reporting be reconciled to the trial balance to ensure accurate reporting.
This is a repeat finding of 2021-010.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs.
Condition and Context: During our testing of expenditures obligated during the year, we were made aware of the fact that management had invertedly duplicated a draw of funds totaling $303,024.92. This error was not discovered until several months after the fact.
Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance.
Recommendation: See finding 2022-001, specifically the recommendation relating to appropriate oversight in the finance department. We recommend that the finance department continue to hire and train its employees on various programmatic requirements and resources, to ensure compliance with both existing and new federal compliance requirements.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs.
Condition and Context: We selected a sample of 12 different program related disbursement and requested supporting documentation for costs allocated to the grant. Our sample was not statistically valid. We reviewed invoice and payment detail to for each selection, but noted that there were no POs available for review or approval for any selection.
Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance.
Recommendation: See finding 2022-001, specifically the recommendation relating to appropriate oversight in the finance department. We recommend that the finance department continue to hire and train its employees on various programmatic requirements and resources, to ensure compliance with both existing and new federal compliance requirements.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Material Weakness in Internal Control over Compliance - Appropriate Internal Control Structure Related to Compliance Requirements.Recommendation: See finding 2022-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation.
See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Agency must, among other things, “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)”.
Condition and Context: This finding has a pervasive effect on the Agency’s ability to maintain compliance over its award programs. The condition and context described in finding 2022-001 also relates to this finding. In addition to the condition and context noted above the following deficiencies were identified which stemmed from the deficiencies noted above and had an impact solely on internal control over compliance.
a) Existing compliance requirements are not appropriately reviewed by management.
i) Review was not completed to support tenants waitlist progression through the Housing Choice Voucher program.
ii) Housing Choice Voucher tenant files are not appropriately reviewed to ensure documentation retained supports compliance requirements.
iii) HUD reporting is not regularly reconciled to the trial balance.
iv) Lack of controls in place to prevent transfers and use of restricted funds for unallowable purposes.
This finding is a repeat finding of 2021-003 and 2020-003.
Cause and Effect: As detailed above in finding 2022-001, in our opinion, the predominate reason for the finding is due to the lack of appropriate oversight in the finance department and the finance department not following the written policies of the Agency do to staffing constraints. The material weakness resulted in the noncompliance findings described below.
Criteria: 24 CFR 982.155 indicates Housing Choice Voucher Program (HCVP) administrative reserves must be used to pay program administrative expenses. HUD has indicated in PIH Notice 2005-01 HCVP administrative reserves are restricted solely for the HCVP and no other Agency administrative expenses.
Condition and Context: The Agency used HCVP administrative reserves to cover Agency payroll expenses during 2022 and through the date the financial statements were available to be issued. The Agency also made errors in initially recording restricted funds received in the general ledger which resulted in journal entries and bank transfers necessary to appropriately record amounts received. The specific HCVP administrative reserves used to cover non-HCVP Agency payroll expenses were advanced as noted below.
• $500,00 advanced on January 21, 2022. Amount not repaid as of the date the financial statements were available to be issued.
• $200,000 advanced on March 10, 2022. Amount not repaid as of the date the financial statements were available to be issued.
Cause and Effect: The predominate reason for the finding is due to cash flow concerns specific to payment of payroll and lack of controls surrounding transfer of funds from restricted accounts. This finding resulted in noncompliance with allowable use of HAP.
Known Questioned Costs: $700,000 of HCV administrative reserves used to non-HCVP cover payroll expenses during 2022.
Recommendation: See finding 2022-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: Management is responsible for maintaining appropriate documentation to substantiate tenant eligibility determinations and compliance with applicable special tests and provisions.
Condition and Context: We selected a sample of 60 tenant files for testing Eligibility; Reporting - Special Reporting HUD-50058, Family Report; and Special Tests and Provisions: Selection for Waiting List, Reasonable Rent, Housing Quality Standards Inspections, and Housing Assistance Payment. Our sample was not statistically valid. Of the items selected we noted the following:
1) 7 of the 60 tenant files selected for testing were not able to be located.
2) 11 of the 60 tenant files selected for testing were missing documentation related to housing quality standards inspections.
We also requested supporting documentation to show progression of tenants being moved through the waitlist and into the Housing Choice Voucher program. Management was unable to provide this information due to system limitations and lack of appropriate tracking of this data throughout the year.
This is a repeat finding of 2021-005, 2020-005 and 2019-005.
Cause and Effect: The seven missing tenant files resulted in an inability to make a determination on compliance for these tenants. Unsupported tenant eligibility determinations could impact future federal funding. The use of improper income related to eligibility resulted in noncompliance as relates to eligibility, rent reasonableness, and HAP. The inability to provide data to support the progression of the tenant waitlist resulted in an inability to make a determination on compliance for all tenants selected and could result in tenants being improperly added to the program.
Recommendation: We recommend the Agency review current procedures surrounding maintenance of tenant files and waitlists to ensure adequacy of the procedures in place and identify areas of improvement to establish and maintain adequate internal controls over compliance.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 24 CFR 982.404 requires public housing authorities to require an owner to correct any life-threatening deficiencies identified during housing quality standards (HQS) inspections within 24 hours of the inspection and all other HQS deficiencies within 30 days of the inspection or within a specifically approved extension. If deficiencies are not corrected in the required timeframe the public housing authority must abate HAPs beginning no later than the first of the month following the specified correction period or the HAP contract is to be terminated.
Condition and Context: We reviewed the 2022 failed inspection listing provided by management and selected a sample of 60 failed inspections for testing. Our sample was not statistically valid. We noted 11 properties that had multiple failed inspections which were not moved to abatement.
Recommendation: See finding 2022-001. Additionally, the auditor recommends the Agency review current procedures surrounding housing quality inspection standards to ensure accuracy of the procedures in place and identify areas of improvement to establish and maintain adequate internal control.
This is a repeat finding of 2021-007 and 2020-007.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.
Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs.
Condition and Context: We selected a sample of 20 different payroll entries related to time allocated to the Housing Choice Voucher program and requested supporting documentation for costs allocated to the grant. Our sample was not statistically valid. We reviewed payroll summary reports and paycheck detail to various programs, but noted that there were no timecards available for review or approval for any selection. It was noted that the payroll administrator was reviewing and approving the timecards, rather than a direct supervisor over the Section 8 program. Additionally, management indicated that timecards and payroll reports were not universally available due to system limitations and employee turnover.
Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance.
Recommendation: We recommend the review and approval of timecards be completed by a direct supervisor, that payroll records be regularly reviewed against timecards, and all supporting documentation for program costs be retained internally.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date
Criteria: HUD-52681-B is required to be submitted monthly electronically via the VMS. HUD relies on the audit of these key line items below to determine the reasonableness of the data submitted for the purpose of calculating funding under the program.
Condition and Context: We obtained a summary of monthly VMS reporting from management noting that the key line items were unable to be reconciled to the trial balance by management. Specifically, HAP expenses reported on the trial balance are overstated by $3,530,690 relative to the HUD reporting.
Cause and Effect: As described in 2022-001, the Agency has not maintained appropriate internal controls over compliance. Lack of regular reconciliation of HAP expenses to the HUD reporting referenced above resulted in the inability to reconcile at year end.
Recommendation: We recommend that monthly VMS reporting be reconciled to the trial balance to ensure accurate reporting.
This is a repeat finding of 2021-010.
Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.