FAC Explorer

Audit 293526

FY End
2023-06-30
Total Expended
$64.16M
Findings
6
Programs
5
Organization: Housing Authority of the City of Galveston, Texas (TX)
Year: 2023 Accepted: 2024-03-05
Auditor: Cliftonlarsonallen LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
372227 2023-001 Significant Deficiency Yes L
372228 2023-002 Significant Deficiency Yes E
372229 2023-003 Significant Deficiency Yes N
948669 2023-001 Significant Deficiency Yes L
948670 2023-002 Significant Deficiency Yes E
948671 2023-003 Significant Deficiency Yes N

Programs

ALN Program Spent Major Findings
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $41.31M - 0
14.871 Section 8 Housing Choice Vouchers $19.67M Yes 3
14.850 Public and Indian Housing $1.90M - 0
14.872 Public Housing Capital Fund $1.17M - 0
14.896 Family Self-Sufficiency Program $113,550 - 0

Contacts

Name Title Type
ULV7BMZ3GL57 Arvle Dunn Auditee
4097651990 Gaby Miller Auditor
No contacts on file

Notes to SEFA

Title: HOUSING CHOICE VOUCHER PROGRAM Accounting Policies: ORGANIZATION The accompanying Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of the Housing Authority of the City of Galveston, Texas (the Authority) for the year ended June 30, 2023. All federal awards received directly from federal agencies, as well as federal awards passed through other governmental agencies, are included on the Schedule. BASIS OF PRESENTATION The Schedule includes the federal award activity of the Authority and is presented on the accrual basis of accounting. The information in the Schedule is presented in accordance with the requirements of the Uniform Guidance. Therefore, some amounts presented in the Schedule may differ from amounts presented in or used in the preparation of the basic financial statements. De Minimis Rate Used: N Rate Explanation: The Authority has not elected to use the 10% de minimus indirect cost rate as allowed in the Uniform Guidance, Section 414. In accordance with HUD regulations, HUD considers the Annual Budget Authority for the Section 8 Housing Choice Voucher Program, CFDA No. 14.871, to be considered an expenditure for the purposes of this schedule. Therefore, the amount in this schedule is the total amount received directly from HUD and not the total expenditures paid by the Authority.
Title: INDIRECT COSTS Accounting Policies: ORGANIZATION The accompanying Schedule of Expenditures of Federal Awards (the Schedule) presents the activity of all federal award programs of the Housing Authority of the City of Galveston, Texas (the Authority) for the year ended June 30, 2023. All federal awards received directly from federal agencies, as well as federal awards passed through other governmental agencies, are included on the Schedule. BASIS OF PRESENTATION The Schedule includes the federal award activity of the Authority and is presented on the accrual basis of accounting. The information in the Schedule is presented in accordance with the requirements of the Uniform Guidance. Therefore, some amounts presented in the Schedule may differ from amounts presented in or used in the preparation of the basic financial statements. De Minimis Rate Used: N Rate Explanation: The Authority has not elected to use the 10% de minimus indirect cost rate as allowed in the Uniform Guidance, Section 414. The Authority did not charge any indirect costs to its federal programs in 2023.

Finding Details

Finding 2023-001
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Choice Voucher Program Assistance Listing Number: 14.871 Federal Award Identification Number and Year: TX017 - 2023 Award Period: July 1, 2022 through June 30, 2023 Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or Specific Requirement: HUD-50058, Family Report (OMB No. 2577-0083) – The PHA is required to submit this form electronically to HUD each time the PHA completes an admission, annual reexamination, interim reexamination, portability move-in, or other change of unit for a family. The PHA must also submit the Family Report when a family ends participation in the program or moves out of the PHA’s jurisdiction under portability (24 CFR Part 908 and 24 CFR section 982.158). Prior Year Finding: This finding is a repeat finding in the immediate prior year. Prior year finding number was 2022-001. Condition: During our testing, it was noted the Authority did not have adequate internal controls designed to ensure that special reporting requirements were being met. Questioned Costs: None Context: Of the 40 HUD-50058’s tested; we noted that 2 out of 40 were not uploaded timely to HUD’s PIH Information Center (PIC). Our sample was a statistically valid sample. Cause: The Authority does not have controls in place to ensure that special reporting requirements are being met. Effect: The Authority is not in compliance with program requirements over special reporting. Recommendation: The Authority should implement processes to ensure HUD-50058 submissions are submitted into the PIC system timely. View of Responsible Officials: There is no disagreement with this finding.
Finding 2023-002
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Choice Voucher Program Assistance Listing Number: 14.871 Federal Award Identification Number and Year: TX017 – 2023 Award Period: July 1, 2022 through June 30, 2023 Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or Specific Requirement: Most PHAs devise their own application forms that are filled out by the PHA staff during an interview with the tenant. The head of the household signs (a) one or more release forms to allow the PHA to obtain information from third parties; (b) a federally prescribed general release form for employment information; and (c) a privacy notice. Under some circumstances, other members of the family are required to sign these forms (24 CFR sections 5.212 and 5.230). The PHA must do the following: (1) As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 982.516). (2) For both family income examinations and reexaminations, obtain and document in the family file third party verification of (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income-based rent (24 CFR section 982.516). (3) Determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification in accordance with 24 CFR Part 5 Subpart F (24 CFR section 5.601 et seq.) (24 CFR sections 982.201, 982.515, and 982.516). (4) Select tenants from the HCVP waiting list (see III.N.1, “Special Tests and Provisions – Selection from the Waiting List”) (24 CFR sections 982.202 through 982.207). (5) Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification (24 CFR section 982.516). Prior Year Finding: This finding is a repeat finding in the immediate prior year. Prior year finding number was 2022-002. Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure that eligibility requirements were being met. Questioned Costs: None Context: Out of 40 tenants tested, there were exceptions in 9 tenant files. Our sample was a statistically valid sample.  One instance where there was a difference of income reported on the HUD-50058 and the third party verification  One instance where Medicare expenses were not included as a medical allowance  Seven instances where annual recertifications were not processed annually Cause: The Authority does not have controls in place to ensure it is meeting all eligibility requirements set by HUD. Effect: The Authority is not in compliance with program requirements over eligibility. Recommendation: The Authority should implement processes to ensure that all documentation is received and that the correct inputs are being accurately reported on the HUD-50058. View of Responsible Officials: Management agrees with the finding.
Finding 2023-003
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Choice Voucher Program Assistance Listing Number: 14.871 Federal Award Identification Number and Year: TX017 – 2023 Award Period: July 1, 2022 through June 30, 2023 Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or Specific Requirement: For units under HAP contract that fail to meet HQS, the PHA must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as a result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the PHA must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). The PHA must inspect the unit leased to a family at least annually to determine if the unit meets 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)). Prior Year Finding: This finding is a repeat finding in the immediate prior year. Prior year finding number was 2022-003. Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure that HQS inspection requirements were being met. Questioned Costs: None Context: Of the 40 annual HQS inspections tested, it was noted:  1 instance where a unit failed inspection and was not reinspected within 30 days of the initial failure date  2 instances where the passed inspection of a previously failed unit was not properly documented  2 instances where the Authority failed to process abatements for units that failed inspections  1 instance where the Authority failed to process termination in a timely manner. Of the 11 quality control re-inspections tested, it was noted that:  7 quality control inspections were not performed within 90 days of the original inspection date.  1 instance where the quality control inspection was performed by the same inspection of the original inspection. Our sample was a statistically valid sample. Cause: The Authority does not have adequate internal controls designed to ensure that HQS inspection requirements were being met. Effect: The Authority is not in compliance with program requirements over HQS Inspections. Recommendation: The Authority should implement processes to ensure all HQS re-inspections are completed timely and that there is proper documentation of approved extensions and abatements. View of Responsible Officials: Management agrees with the finding.
Finding 2023-001
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Choice Voucher Program Assistance Listing Number: 14.871 Federal Award Identification Number and Year: TX017 - 2023 Award Period: July 1, 2022 through June 30, 2023 Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or Specific Requirement: HUD-50058, Family Report (OMB No. 2577-0083) – The PHA is required to submit this form electronically to HUD each time the PHA completes an admission, annual reexamination, interim reexamination, portability move-in, or other change of unit for a family. The PHA must also submit the Family Report when a family ends participation in the program or moves out of the PHA’s jurisdiction under portability (24 CFR Part 908 and 24 CFR section 982.158). Prior Year Finding: This finding is a repeat finding in the immediate prior year. Prior year finding number was 2022-001. Condition: During our testing, it was noted the Authority did not have adequate internal controls designed to ensure that special reporting requirements were being met. Questioned Costs: None Context: Of the 40 HUD-50058’s tested; we noted that 2 out of 40 were not uploaded timely to HUD’s PIH Information Center (PIC). Our sample was a statistically valid sample. Cause: The Authority does not have controls in place to ensure that special reporting requirements are being met. Effect: The Authority is not in compliance with program requirements over special reporting. Recommendation: The Authority should implement processes to ensure HUD-50058 submissions are submitted into the PIC system timely. View of Responsible Officials: There is no disagreement with this finding.
Finding 2023-002
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Choice Voucher Program Assistance Listing Number: 14.871 Federal Award Identification Number and Year: TX017 – 2023 Award Period: July 1, 2022 through June 30, 2023 Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or Specific Requirement: Most PHAs devise their own application forms that are filled out by the PHA staff during an interview with the tenant. The head of the household signs (a) one or more release forms to allow the PHA to obtain information from third parties; (b) a federally prescribed general release form for employment information; and (c) a privacy notice. Under some circumstances, other members of the family are required to sign these forms (24 CFR sections 5.212 and 5.230). The PHA must do the following: (1) As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 982.516). (2) For both family income examinations and reexaminations, obtain and document in the family file third party verification of (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income-based rent (24 CFR section 982.516). (3) Determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification in accordance with 24 CFR Part 5 Subpart F (24 CFR section 5.601 et seq.) (24 CFR sections 982.201, 982.515, and 982.516). (4) Select tenants from the HCVP waiting list (see III.N.1, “Special Tests and Provisions – Selection from the Waiting List”) (24 CFR sections 982.202 through 982.207). (5) Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification (24 CFR section 982.516). Prior Year Finding: This finding is a repeat finding in the immediate prior year. Prior year finding number was 2022-002. Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure that eligibility requirements were being met. Questioned Costs: None Context: Out of 40 tenants tested, there were exceptions in 9 tenant files. Our sample was a statistically valid sample.  One instance where there was a difference of income reported on the HUD-50058 and the third party verification  One instance where Medicare expenses were not included as a medical allowance  Seven instances where annual recertifications were not processed annually Cause: The Authority does not have controls in place to ensure it is meeting all eligibility requirements set by HUD. Effect: The Authority is not in compliance with program requirements over eligibility. Recommendation: The Authority should implement processes to ensure that all documentation is received and that the correct inputs are being accurately reported on the HUD-50058. View of Responsible Officials: Management agrees with the finding.
Finding 2023-003
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Choice Voucher Program Assistance Listing Number: 14.871 Federal Award Identification Number and Year: TX017 – 2023 Award Period: July 1, 2022 through June 30, 2023 Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or Specific Requirement: For units under HAP contract that fail to meet HQS, the PHA must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as a result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the PHA must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). The PHA must inspect the unit leased to a family at least annually to determine if the unit meets 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)). Prior Year Finding: This finding is a repeat finding in the immediate prior year. Prior year finding number was 2022-003. Condition: During our testing, we noted the Authority did not have adequate internal controls designed to ensure that HQS inspection requirements were being met. Questioned Costs: None Context: Of the 40 annual HQS inspections tested, it was noted:  1 instance where a unit failed inspection and was not reinspected within 30 days of the initial failure date  2 instances where the passed inspection of a previously failed unit was not properly documented  2 instances where the Authority failed to process abatements for units that failed inspections  1 instance where the Authority failed to process termination in a timely manner. Of the 11 quality control re-inspections tested, it was noted that:  7 quality control inspections were not performed within 90 days of the original inspection date.  1 instance where the quality control inspection was performed by the same inspection of the original inspection. Our sample was a statistically valid sample. Cause: The Authority does not have adequate internal controls designed to ensure that HQS inspection requirements were being met. Effect: The Authority is not in compliance with program requirements over HQS Inspections. Recommendation: The Authority should implement processes to ensure all HQS re-inspections are completed timely and that there is proper documentation of approved extensions and abatements. View of Responsible Officials: Management agrees with the finding.