FAC Explorer

Audit 290411

FY End
2022-12-31
Total Expended
$241.43M
Findings
6
Programs
8
Organization: Housing Authority of the City of Newark (NJ)
Year: 2022 Accepted: 2024-02-14
Auditor: Novogradac & Company LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
367394 2022-002 Material Weakness - EN
367395 2022-002 Material Weakness - EN
367396 2022-003 Material Weakness - A
943836 2022-002 Material Weakness - EN
943837 2022-002 Material Weakness - EN
943838 2022-003 Material Weakness - A

Programs

ALN Program Spent Major Findings
14.871 Section 8 Housing Choice Vouchers $82.58M Yes 1
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $69.05M Yes 1
14.850 Public and Indian Housing $64.59M - 0
14.872 Public Housing Capital Fund $20.90M - 0
14.195 Section 8 Housing Assistance Payments Program $2.50M - 0
14.879 Mainstream Vouchers $1.53M Yes 1
14.870 Resident Opportunity and Supportive Services - Service Coordinators $142,683 - 0
14.877 Public Housing Family Self-Sufficiency Under Resident Opportunity and Supportive Services $134,897 - 0

Contacts

Name Title Type
SJTMMSKN5M99 Leonard Spicer Auditee
9732736677 Rich Larsen Auditor
No contacts on file

Notes to SEFA

Accounting Policies: BASIS OF PRESENTATION The 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 December 31, 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) and State of New Jersey OMB Circular 15-08. Because the Schedule presents only a selected portion of operations of the Authority, it is not intended to and does not present the net 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 POLICIES Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the principles contained in the Uniform Guidance, OMB Circular A-87 and the State of New Jersey OMB Circular 15-08, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: INDIRECT COST RATE The Authority has not elected to use the ten percent de minimis indirect cost rate allowed under the Uniform Guidance.

Finding Details

Finding 2022-002
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Housing Voucher Cluster - Section 8 Housing Choice Vouchers, Mainstream Vouchers, and Emergency Housing Vouchers Federal Assistance Listing Numbers: 14.871, 14.879, and 14.EHV Material Noncompliance Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance Criteria: As a grantee and administrator of HUD's Section 8 Housing Choice Vouchers, Mainstream Vouchers and Emergency Housing Voucher Programs (the "HVC Cluster"), the Authority must adhere to the rules and regulations governing the programs. Condition: The Authority did not comply with rules and regulations governing the HVC Cluster in the areas of tenant file maintenance, waiting list maintenance and housing quality inspections. Context: Fifty-six (56) Section 8 Housing Choice Vouchers, ten (10) Mainstream Vouchers and one (1) Emergency Housing Vouchers Program tenant files were tested with noncompliance pervasive through all aspects of essential rules and regulations, including in areas of: income recertification , maintaining signed leases and obtaining vital household information. Additionally, twenty-five (25) Section 8 Housing Choice Vouchers Program and two (2) Mainstream Vouchers Program failed inspections were also tested, of which six (6) Section 8 Housing Choice Vouchers Program and one (1) Mainstream Vouchers Program failed inspections were improperly administered. Cause: The Authority experienced high turnover with key employees throughout many departments and as a result Authority personnel did not follow established internal control polices over HCV Cluster compliance. Effect: The Section 8 Housing Choice Vouchers, Mainstream Vouchers and Emergency Housing Voucher Programs did not comply with the rules and regulations governing the HVC Cluster. Recommendation: We recommend that the Authority implement a process whereby Authority personnel receive the appropriate training in all areas of HVC Cluster compliance. Safeguards should be put into place so that if an employee or manager leaves a department, other employees have been trained to fill that void. Authority's Response: The Authority experienced significant turnover in employees during the year and as a result certain processes were not followed and source documents were misplaced or destroyed. Management agrees with the Auditors' finding and has hired a new Executive Director who will implement the required safeguards and ensure that the Authority follows its Section 8 Administrative Plan and the HUD compliance requirements to remedy the aforementioned deficiencies.
Finding 2022-002
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Housing Voucher Cluster - Section 8 Housing Choice Vouchers, Mainstream Vouchers, and Emergency Housing Vouchers Federal Assistance Listing Numbers: 14.871, 14.879, and 14.EHV Material Noncompliance Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance Criteria: As a grantee and administrator of HUD's Section 8 Housing Choice Vouchers, Mainstream Vouchers and Emergency Housing Voucher Programs (the "HVC Cluster"), the Authority must adhere to the rules and regulations governing the programs. Condition: The Authority did not comply with rules and regulations governing the HVC Cluster in the areas of tenant file maintenance, waiting list maintenance and housing quality inspections. Context: Fifty-six (56) Section 8 Housing Choice Vouchers, ten (10) Mainstream Vouchers and one (1) Emergency Housing Vouchers Program tenant files were tested with noncompliance pervasive through all aspects of essential rules and regulations, including in areas of: income recertification , maintaining signed leases and obtaining vital household information. Additionally, twenty-five (25) Section 8 Housing Choice Vouchers Program and two (2) Mainstream Vouchers Program failed inspections were also tested, of which six (6) Section 8 Housing Choice Vouchers Program and one (1) Mainstream Vouchers Program failed inspections were improperly administered. Cause: The Authority experienced high turnover with key employees throughout many departments and as a result Authority personnel did not follow established internal control polices over HCV Cluster compliance. Effect: The Section 8 Housing Choice Vouchers, Mainstream Vouchers and Emergency Housing Voucher Programs did not comply with the rules and regulations governing the HVC Cluster. Recommendation: We recommend that the Authority implement a process whereby Authority personnel receive the appropriate training in all areas of HVC Cluster compliance. Safeguards should be put into place so that if an employee or manager leaves a department, other employees have been trained to fill that void. Authority's Response: The Authority experienced significant turnover in employees during the year and as a result certain processes were not followed and source documents were misplaced or destroyed. Management agrees with the Auditors' finding and has hired a new Executive Director who will implement the required safeguards and ensure that the Authority follows its Section 8 Administrative Plan and the HUD compliance requirements to remedy the aforementioned deficiencies.
Finding 2022-003
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Projects Federal Assistance Listing Numbers: 14.155 Material Noncompliance Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance Criteria: As a recipient of a HUD insured loan as part of the Mortgage Insurance for the Purchase or Refinancing of Existing Multi-family Projects Program (the "Program"), the Authority is responsible to comply with the rules and regulations governing the Program. Evidence of compliance with Program rules and regulations needs to be documented, maintained and available for review. Condition: The Authority did not maintain appropriate evidence documenting compliance with the Program and as such audit testing could not be completed over areas such as; cash disbursements, new move-in testing, new move-outs testing, management agent certification, regulatory reviews and management functions. Additionally, the Authority did not record material transactions related to the HUD loans, closing costs and funds held with trustees. Context: The Authority was unable to provide requested documentation at the time of audit to properly test the HUD compliance requirements: Cause: There is a material weakness in internal controls over compliance for the compliance related to the maintenance of accounts and other records. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance. Effect: The Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Projects is in material non-compliance with the compliance requirements of the program. Recommendation: We recommend that the Authority implement a process whereby Authority personnel receive the appropriate training in all areas of Program compliance. Safeguards should be put into place so that if an employee or manager leaves a department, other employees have been trained to fill that void. Authority's Response: The Authority experienced significant turnover in employees during the year and as a result certain processes were not followed and source documents were misplaced or destroyed. Management agrees with the Auditors' finding and has hired a new Executive Director who will implement the required safeguards and ensure that the Authority follows HUD compliance requirements to remedy the aforementioned deficiencies.
Finding 2022-002
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Housing Voucher Cluster - Section 8 Housing Choice Vouchers, Mainstream Vouchers, and Emergency Housing Vouchers Federal Assistance Listing Numbers: 14.871, 14.879, and 14.EHV Material Noncompliance Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance Criteria: As a grantee and administrator of HUD's Section 8 Housing Choice Vouchers, Mainstream Vouchers and Emergency Housing Voucher Programs (the "HVC Cluster"), the Authority must adhere to the rules and regulations governing the programs. Condition: The Authority did not comply with rules and regulations governing the HVC Cluster in the areas of tenant file maintenance, waiting list maintenance and housing quality inspections. Context: Fifty-six (56) Section 8 Housing Choice Vouchers, ten (10) Mainstream Vouchers and one (1) Emergency Housing Vouchers Program tenant files were tested with noncompliance pervasive through all aspects of essential rules and regulations, including in areas of: income recertification , maintaining signed leases and obtaining vital household information. Additionally, twenty-five (25) Section 8 Housing Choice Vouchers Program and two (2) Mainstream Vouchers Program failed inspections were also tested, of which six (6) Section 8 Housing Choice Vouchers Program and one (1) Mainstream Vouchers Program failed inspections were improperly administered. Cause: The Authority experienced high turnover with key employees throughout many departments and as a result Authority personnel did not follow established internal control polices over HCV Cluster compliance. Effect: The Section 8 Housing Choice Vouchers, Mainstream Vouchers and Emergency Housing Voucher Programs did not comply with the rules and regulations governing the HVC Cluster. Recommendation: We recommend that the Authority implement a process whereby Authority personnel receive the appropriate training in all areas of HVC Cluster compliance. Safeguards should be put into place so that if an employee or manager leaves a department, other employees have been trained to fill that void. Authority's Response: The Authority experienced significant turnover in employees during the year and as a result certain processes were not followed and source documents were misplaced or destroyed. Management agrees with the Auditors' finding and has hired a new Executive Director who will implement the required safeguards and ensure that the Authority follows its Section 8 Administrative Plan and the HUD compliance requirements to remedy the aforementioned deficiencies.
Finding 2022-002
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Housing Voucher Cluster - Section 8 Housing Choice Vouchers, Mainstream Vouchers, and Emergency Housing Vouchers Federal Assistance Listing Numbers: 14.871, 14.879, and 14.EHV Material Noncompliance Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance Criteria: As a grantee and administrator of HUD's Section 8 Housing Choice Vouchers, Mainstream Vouchers and Emergency Housing Voucher Programs (the "HVC Cluster"), the Authority must adhere to the rules and regulations governing the programs. Condition: The Authority did not comply with rules and regulations governing the HVC Cluster in the areas of tenant file maintenance, waiting list maintenance and housing quality inspections. Context: Fifty-six (56) Section 8 Housing Choice Vouchers, ten (10) Mainstream Vouchers and one (1) Emergency Housing Vouchers Program tenant files were tested with noncompliance pervasive through all aspects of essential rules and regulations, including in areas of: income recertification , maintaining signed leases and obtaining vital household information. Additionally, twenty-five (25) Section 8 Housing Choice Vouchers Program and two (2) Mainstream Vouchers Program failed inspections were also tested, of which six (6) Section 8 Housing Choice Vouchers Program and one (1) Mainstream Vouchers Program failed inspections were improperly administered. Cause: The Authority experienced high turnover with key employees throughout many departments and as a result Authority personnel did not follow established internal control polices over HCV Cluster compliance. Effect: The Section 8 Housing Choice Vouchers, Mainstream Vouchers and Emergency Housing Voucher Programs did not comply with the rules and regulations governing the HVC Cluster. Recommendation: We recommend that the Authority implement a process whereby Authority personnel receive the appropriate training in all areas of HVC Cluster compliance. Safeguards should be put into place so that if an employee or manager leaves a department, other employees have been trained to fill that void. Authority's Response: The Authority experienced significant turnover in employees during the year and as a result certain processes were not followed and source documents were misplaced or destroyed. Management agrees with the Auditors' finding and has hired a new Executive Director who will implement the required safeguards and ensure that the Authority follows its Section 8 Administrative Plan and the HUD compliance requirements to remedy the aforementioned deficiencies.
Finding 2022-003
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Projects Federal Assistance Listing Numbers: 14.155 Material Noncompliance Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance Criteria: As a recipient of a HUD insured loan as part of the Mortgage Insurance for the Purchase or Refinancing of Existing Multi-family Projects Program (the "Program"), the Authority is responsible to comply with the rules and regulations governing the Program. Evidence of compliance with Program rules and regulations needs to be documented, maintained and available for review. Condition: The Authority did not maintain appropriate evidence documenting compliance with the Program and as such audit testing could not be completed over areas such as; cash disbursements, new move-in testing, new move-outs testing, management agent certification, regulatory reviews and management functions. Additionally, the Authority did not record material transactions related to the HUD loans, closing costs and funds held with trustees. Context: The Authority was unable to provide requested documentation at the time of audit to properly test the HUD compliance requirements: Cause: There is a material weakness in internal controls over compliance for the compliance related to the maintenance of accounts and other records. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance. Effect: The Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Projects is in material non-compliance with the compliance requirements of the program. Recommendation: We recommend that the Authority implement a process whereby Authority personnel receive the appropriate training in all areas of Program compliance. Safeguards should be put into place so that if an employee or manager leaves a department, other employees have been trained to fill that void. Authority's Response: The Authority experienced significant turnover in employees during the year and as a result certain processes were not followed and source documents were misplaced or destroyed. Management agrees with the Auditors' finding and has hired a new Executive Director who will implement the required safeguards and ensure that the Authority follows HUD compliance requirements to remedy the aforementioned deficiencies.