Audit 294710

Low Rent Program-CDFA#14.850 Finding 2023-001-Non-Compliance with Procurement Policy-Procurement Criteria and Condition All amounts above the Small Purchase Threshold (SMT) should follow the Procurement Policy. Depending on the amount, telephone, email, or written bids may be acceptable. In other instances, depending on the estimated amount of expenditure, more strict methods are required by both the Authority’s Procurement Policy and also federal regulations regarding procurement. Even when individual expenditure amounts paid are below the SMT, if it is reasonable to assume that similar expenditures through the year will in total exceed the SMT, obtaining other bids is still required. Context During the audit year, $142,665 was paid to the same contractor for heating and cooling maintenance expenses, in approximately 25 payments. Most of each of the 25 payments were for more than one service. $52,791 was paid to the same contractor noted above for plumbing work, in 37 payments. Many of the 37 payments were for more than one service. It does not appear the Authority solicited bids or quotes from other contractors for these services. Effect The possibility of paying more than a reasonable charge was not reduced to a lower level by soliciting quotes for the same service. Management asserts that this is the only entity that locally, will both timely appear on a regular basis and perform a satisfactory service. Often the service required may not be a technical emergency. Nevertheless, management asserts, the service such as a toilet plumbing problem or non-functioning air conditioning in hot weather is a near emergency. We do note that a large related-type job for replacement of 87 air conditioners, replacement of water lines, and other work was reviewed. The contract-award was dated February 13, 2023. The work appeared to be properly advertised for bid, bids obtained, insurance and references checked, and awarded with the advice and review of the architect. The award was for $739,849. It appears Davis-Bacon compliance is being properly monitored on that job. Field reports and monitoring reports by management are being prepared. The first payment was in August 2023.Cause Oversight by management. Questioned Costs None Recommendation We realize it is not practical to bid out all services rendered for similar services that result in 62 payments (25 and 37 above), with multiple particulars covered by most if not all the payments. However, Management should periodically bid out specific jobs, specifying the factors involved in making the award, and noting price is not the sole determining factor. These will have to be uniform jobs where the services needed are predictable. Then, for a reasonable period of time, this vendor would be used for the same electrical of plumbing type service without individual quotes. Hourly rates should also be compared among vendors, since often the electrician, plumber, or other contractor may not know what they may encounter until they are into the job. When management is unable to obtain three or more quotes, they should review and document the charges for uniform services and hourly rates in nearby cities for comparison purposes. View of Responsible Officials I am Skip Evans, Executive Director and Designated Person to answer these findings. I will comply with the auditor’s suggestion.

Low Rent Program-CDFA#14.850 Finding 2023-002-Inventory of Maintenance Equipment and Office Furniture Should Be Updated-Special Tests Criteria and Condition Federal regulations require that the Authority update its inventory of equipment and Office Equipment at least every two years. Context The listing has not been updated in several years. We do note that the ranges, refrigerators, and hot water heaters in each unit are maintained by serial number on Excel, and are checked at the annual or move-in inspections Effect The estimated effect of non-compliance is likely minimal. The office and Maintenance Shop have not been remodeled or moved. The E.D. asserts that he is familiar with the vehicles and large pieces of equipment. Cause Oversight by management. Questioned Costs None Recommendation There are various ways to document an update of the inventory. A common method is to tag with a number all of the pieces of office furniture and maintenance equipment. Small items, hanging framed prints, etc. can be disregarded. Then, on Excel or something similar, a description such as “E.D. desk” is entered on the page, along with its assigned number. Further breakdowns likely could be “E.D.’s office”, “conference room”, etc. View of Responsible Officials We will comply with the auditor’s recommendation.

Low Rent Program-CDFA#14.850 Finding 2023-003-Section III Summary Report Not on File-Reporting Criteria and Condition A Section III Summary Report is required to be prepared annually. Currently it is not required to be sent to HUD. However, it is supposed to be available for third party review. Context Management asserts that they did not prepare the report for the audit year Effect Federal regulations were not complied with. Cause Oversight by management Questioned Costs None Recommendation The reports should be timely prepared annually. They should be available for third party review. View of Responsible Officials We will comply with the auditor’s recommendation.

Low Rent Program-CDFA#14.850 Finding 2023-001-Non-Compliance with Procurement Policy-Procurement Criteria and Condition All amounts above the Small Purchase Threshold (SMT) should follow the Procurement Policy. Depending on the amount, telephone, email, or written bids may be acceptable. In other instances, depending on the estimated amount of expenditure, more strict methods are required by both the Authority’s Procurement Policy and also federal regulations regarding procurement. Even when individual expenditure amounts paid are below the SMT, if it is reasonable to assume that similar expenditures through the year will in total exceed the SMT, obtaining other bids is still required. Context During the audit year, $142,665 was paid to the same contractor for heating and cooling maintenance expenses, in approximately 25 payments. Most of each of the 25 payments were for more than one service. $52,791 was paid to the same contractor noted above for plumbing work, in 37 payments. Many of the 37 payments were for more than one service. It does not appear the Authority solicited bids or quotes from other contractors for these services. Effect The possibility of paying more than a reasonable charge was not reduced to a lower level by soliciting quotes for the same service. Management asserts that this is the only entity that locally, will both timely appear on a regular basis and perform a satisfactory service. Often the service required may not be a technical emergency. Nevertheless, management asserts, the service such as a toilet plumbing problem or non-functioning air conditioning in hot weather is a near emergency. We do note that a large related-type job for replacement of 87 air conditioners, replacement of water lines, and other work was reviewed. The contract-award was dated February 13, 2023. The work appeared to be properly advertised for bid, bids obtained, insurance and references checked, and awarded with the advice and review of the architect. The award was for $739,849. It appears Davis-Bacon compliance is being properly monitored on that job. Field reports and monitoring reports by management are being prepared. The first payment was in August 2023.Cause Oversight by management. Questioned Costs None Recommendation We realize it is not practical to bid out all services rendered for similar services that result in 62 payments (25 and 37 above), with multiple particulars covered by most if not all the payments. However, Management should periodically bid out specific jobs, specifying the factors involved in making the award, and noting price is not the sole determining factor. These will have to be uniform jobs where the services needed are predictable. Then, for a reasonable period of time, this vendor would be used for the same electrical of plumbing type service without individual quotes. Hourly rates should also be compared among vendors, since often the electrician, plumber, or other contractor may not know what they may encounter until they are into the job. When management is unable to obtain three or more quotes, they should review and document the charges for uniform services and hourly rates in nearby cities for comparison purposes. View of Responsible Officials I am Skip Evans, Executive Director and Designated Person to answer these findings. I will comply with the auditor’s suggestion.

Low Rent Program-CDFA#14.850 Finding 2023-002-Inventory of Maintenance Equipment and Office Furniture Should Be Updated-Special Tests Criteria and Condition Federal regulations require that the Authority update its inventory of equipment and Office Equipment at least every two years. Context The listing has not been updated in several years. We do note that the ranges, refrigerators, and hot water heaters in each unit are maintained by serial number on Excel, and are checked at the annual or move-in inspections Effect The estimated effect of non-compliance is likely minimal. The office and Maintenance Shop have not been remodeled or moved. The E.D. asserts that he is familiar with the vehicles and large pieces of equipment. Cause Oversight by management. Questioned Costs None Recommendation There are various ways to document an update of the inventory. A common method is to tag with a number all of the pieces of office furniture and maintenance equipment. Small items, hanging framed prints, etc. can be disregarded. Then, on Excel or something similar, a description such as “E.D. desk” is entered on the page, along with its assigned number. Further breakdowns likely could be “E.D.’s office”, “conference room”, etc. View of Responsible Officials We will comply with the auditor’s recommendation.

Low Rent Program-CDFA#14.850 Finding 2023-003-Section III Summary Report Not on File-Reporting Criteria and Condition A Section III Summary Report is required to be prepared annually. Currently it is not required to be sent to HUD. However, it is supposed to be available for third party review. Context Management asserts that they did not prepare the report for the audit year Effect Federal regulations were not complied with. Cause Oversight by management Questioned Costs None Recommendation The reports should be timely prepared annually. They should be available for third party review. View of Responsible Officials We will comply with the auditor’s recommendation.