FAC Explorer

Audit 25622

FY End
2022-06-30
Total Expended
$113.39M
Findings
4
Programs
8
Organization: Housing Authority of the County of Santa Cruz (CA)
Year: 2022 Accepted: 2023-02-16
Auditor: Novogradac & Company LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
25413 2022-001 Significant Deficiency - E
25414 2022-002 Significant Deficiency - N
601855 2022-001 Significant Deficiency - E
601856 2022-002 Significant Deficiency - N

Programs

ALN Program Spent Major Findings
14.871 Section 8 Housing Choice Vouchers $108.72M Yes 2
14.879 Mainstream Vouchers $3.15M Yes 0
14.267 Continuum of Care Program $835,149 - 0
14.856 Lower Income Housing Assistance Program_section 8 Moderate Rehabilitation $365,909 - 0
14.896 Family Self-Sufficiency Program $148,629 - 0
14.249 Section 8 Moderate Rehabilitation Single Room Occupancy $114,383 - 0
10.427 Rural Rental Assistance Payments $48,330 - 0
14.239 Home Investment Partnerships Program $3,800 - 0

Contacts

Name Title Type
MMHHPJVM37K7 Aaron Pomeroy Auditee
8314545908 Rich Larsen Auditor
No contacts on file

Notes to SEFA

Accounting Policies: BASIS OF PRESENTATIONThe accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal grant activity of the Authority under programs of the federal government for the year ended June 30, 2022. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of operations of the Authority, it is not intended to and does not present the financial position, changes in net position or cash flows of the Authority. Therefore, some amounts presented in the Schedule may differ from amounts presented in, or used in the preparation of the financial statements.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESExpenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. INDIRECT COST RATEThe Authority has elected not to use the ten percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate.

Finding Details

Finding 2022-001
Finding 2022-001: Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Housing Choice Vouchers and Mainstream Vouchers Programs Federal Catalog Numbers: 14.871 and 14.879 Noncompliance ? E. Eligibility ? Tenant Files Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Eligibility Criteria: Tenant Files. The PHA must do the following: As a condition of admission or continued occupancy, require the tenant and other family member to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 982.516). These files are required to be maintained and available for examination at the time of audit. Condition: Based upon inspection of the Authority?s files and on discussion with management, there were documents that were unavailable for examination at the time of audit. Context: There are approximately 5,068 units. Of a sample size of fifty-nine (59) tenant files, the following was noted. ? HUD 9887 Form was missing in 4 files ? Annual HUD 50058 recertification form and verification of income and assets was missing in 1 file. Lead based paint disclosure form was missing in 1 file. Our sample size is statistically valid. Known Questioned Costs: $59,947 Cause: There is a significant deficiency in compliance for the eligibility type of compliance related to the maintenance of tenant files. The Authority has not properly maintained tenant files in compliance with program requirements following the expiration of HUD waivers as a result of insufficient staffing. Effect: The Section 8 Housing Choice Vouchers and Mainstream Vouchers Programs are in non-compliance with the eligibility type of compliance related to the maintenance of tenant files. Recommendation: We recommend the Authority design and implement a corrective action plan that will assure compliance with the Uniform Guidance and the compliance supplement. Authority Response: The Authority accepts the recommendation of the auditor. Following the expiration of the COVID-19 HUD regulatory waivers, the Authority experienced a large backlog of reexaminations along with higher than usual rates of staff turnover and other staff capacity challenges related to the pandemic. Authority management has developed and implemented a plan to rapidly work through the backlog, bringing the program into compliance. Current HUD SEMAP data reflects that 96% of reexaminations have been completed in a timely manner, which is high enough to provide full points for this SEMAP indicator. Authority management will continue to monitor and strive towards 100% timely recertifications by the end of this fiscal year.
Finding 2022-002
Finding 2022-002: Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Housing Choice Vouchers Programs Federal Catalog Numbers: 14.871 Noncompliance ? N. Special Tests and Provisions - Housing Quality Standards Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions Criteria: Housing Quality Standards Inspections. The PHA must inspect the unit leased to a family at least annually to determine if the unit meets the Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). For units that fail inspection the PHA must correct all life threatening HQS deficiencies within 24 hours and all other deficiencies within 30 days. Condition: Based upon inspection of the Authority?s files and on discussion with management, there was a failed inspection that did not pass reinspection within 30 days without penalty. Context: There are approximately 5,068 units. Of a sample size of twenty-five (25) failed inspections, one failed inspection did not pass reinspection within 30 days. HAP was not abated nor was the tenant evicted. Our sample size is statistically valid. Known Questioned Costs: $10,276 Cause: There is a significant deficiency in internal controls over the compliance for the special tests and provisions type of compliance related to HQS inspections. The Authority has not properly performed HQS inspections in compliance with program requirements following the expiration of HUD waivers as a result of insufficient staffing . Effect: The Section 8 Housing Choice Vouchers Program is in non-compliance with the special tests and provisions type of compliance related to HQS inspections. Recommendation: We recommend the Authority design and implement a corrective action plan that will assure compliance with the Uniform Guidance and the compliance supplement. Authority Response: The Authority accepts the recommendation of the auditor. Following the expiration of the COVID-19 HUD regulatory waivers, the Authority experienced higher than usual rates of staff turnover and other staff capacity challenges related to the pandemic. Authority management is in the process of updating procedures and practices related to inspections and HAP abatement.
Finding 2022-001
Finding 2022-001: Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Housing Choice Vouchers and Mainstream Vouchers Programs Federal Catalog Numbers: 14.871 and 14.879 Noncompliance ? E. Eligibility ? Tenant Files Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Eligibility Criteria: Tenant Files. The PHA must do the following: As a condition of admission or continued occupancy, require the tenant and other family member to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 982.516). These files are required to be maintained and available for examination at the time of audit. Condition: Based upon inspection of the Authority?s files and on discussion with management, there were documents that were unavailable for examination at the time of audit. Context: There are approximately 5,068 units. Of a sample size of fifty-nine (59) tenant files, the following was noted. ? HUD 9887 Form was missing in 4 files ? Annual HUD 50058 recertification form and verification of income and assets was missing in 1 file. Lead based paint disclosure form was missing in 1 file. Our sample size is statistically valid. Known Questioned Costs: $59,947 Cause: There is a significant deficiency in compliance for the eligibility type of compliance related to the maintenance of tenant files. The Authority has not properly maintained tenant files in compliance with program requirements following the expiration of HUD waivers as a result of insufficient staffing. Effect: The Section 8 Housing Choice Vouchers and Mainstream Vouchers Programs are in non-compliance with the eligibility type of compliance related to the maintenance of tenant files. Recommendation: We recommend the Authority design and implement a corrective action plan that will assure compliance with the Uniform Guidance and the compliance supplement. Authority Response: The Authority accepts the recommendation of the auditor. Following the expiration of the COVID-19 HUD regulatory waivers, the Authority experienced a large backlog of reexaminations along with higher than usual rates of staff turnover and other staff capacity challenges related to the pandemic. Authority management has developed and implemented a plan to rapidly work through the backlog, bringing the program into compliance. Current HUD SEMAP data reflects that 96% of reexaminations have been completed in a timely manner, which is high enough to provide full points for this SEMAP indicator. Authority management will continue to monitor and strive towards 100% timely recertifications by the end of this fiscal year.
Finding 2022-002
Finding 2022-002: Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Housing Choice Vouchers Programs Federal Catalog Numbers: 14.871 Noncompliance ? N. Special Tests and Provisions - Housing Quality Standards Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions Criteria: Housing Quality Standards Inspections. The PHA must inspect the unit leased to a family at least annually to determine if the unit meets the Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). For units that fail inspection the PHA must correct all life threatening HQS deficiencies within 24 hours and all other deficiencies within 30 days. Condition: Based upon inspection of the Authority?s files and on discussion with management, there was a failed inspection that did not pass reinspection within 30 days without penalty. Context: There are approximately 5,068 units. Of a sample size of twenty-five (25) failed inspections, one failed inspection did not pass reinspection within 30 days. HAP was not abated nor was the tenant evicted. Our sample size is statistically valid. Known Questioned Costs: $10,276 Cause: There is a significant deficiency in internal controls over the compliance for the special tests and provisions type of compliance related to HQS inspections. The Authority has not properly performed HQS inspections in compliance with program requirements following the expiration of HUD waivers as a result of insufficient staffing . Effect: The Section 8 Housing Choice Vouchers Program is in non-compliance with the special tests and provisions type of compliance related to HQS inspections. Recommendation: We recommend the Authority design and implement a corrective action plan that will assure compliance with the Uniform Guidance and the compliance supplement. Authority Response: The Authority accepts the recommendation of the auditor. Following the expiration of the COVID-19 HUD regulatory waivers, the Authority experienced higher than usual rates of staff turnover and other staff capacity challenges related to the pandemic. Authority management is in the process of updating procedures and practices related to inspections and HAP abatement.