FAC Explorer

Audit 299403

FY End
2023-06-30
Total Expended
$55.63M
Findings
6
Programs
7
Organization: Housing Authority of the City of Everett (WA)
Year: 2023 Accepted: 2024-03-28
Auditor: Office of the Washington State Auditor

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
387083 2023-001 Material Weakness Yes N
387084 2023-001 Material Weakness Yes N
387085 2023-001 Significant Deficiency - N
963525 2023-001 Material Weakness Yes N
963526 2023-001 Material Weakness Yes N
963527 2023-001 Significant Deficiency - N

Programs

ALN Program Spent Major Findings
14.881 Moving to Work Demonstration Program $51.61M Yes 1
14.879 Mainstream Vouchers $1.98M Yes 1
14.871 Covid 19 - Section 8 Housing Choice Vouchers $1.24M Yes 1
14.218 Community Development Block Grants/entitlement Grants $536,235 - 0
14.249 Section 8 Moderate Rehabilitation Single Room Occupancy $147,975 - 0
14.896 Family Self-Sufficiency Program $64,371 - 0
14.856 Lower Income Housing Assistance Program_section 8 Moderate Rehabilitation $51,777 - 0

Contacts

Name Title Type
QNMFEMPBQ5E6 Wendelin Blain Auditee
4253391021 Kristina Baylor Auditor
No contacts on file

Notes to SEFA

Title: Note 1 - Basis of Accounting Accounting Policies: Note 1 - Basis of Accounting: The accompanying Supplemental Schedule of Expenditures of Federal Awards (The "Schedule") presents the activity of all federal financial assistance programs of the Everett Housing Authority (the "Authority). The Authority's reporting entity is defined in Note 1 to the Authority's financial statements. All federal financial assistance received directly from the federal government as well as federal financial assistance that is passed through to other governmental agencies is required to be included on the Schedule. The information presented in the Schedule is presented in accordance with the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements. Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Revenue and expenses are presented on an accrual basis of accounting with the exception of fixed assets and depreciation. For purposes of the Schedule, depreciation expense is not recorded, and the cost of fixed asset additions is included as an expenditure. De Minimis Rate Used: N Rate Explanation: Note 4 - Indirect Cost Rate: The Everett Housing Authority has not elected to use the 10-percent de minimis indirect cost rate allowed under Uniform Guidance. The accompanying Supplemental Schedule of Expenditures of Federal Awards (The "Schedule") presents the activity of all federal financial assistance programs of the Everett Housing Authority (the "Authority). The Authority's reporting entity is defined in Note 1 to the Authority's financial statements. All federal financial assistance received directly from the federal government as well as federal financial assistance that is passed through to other governmental agencies is required to be included on the Schedule. The information presented in the Schedule is presented in accordance with the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements. Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Revenue and expenses are presented on an accrual basis of accounting with the exception of fixed assets and depreciation. For purposes of the Schedule, depreciation expense is not recorded, and the cost of fixed asset additions is included as an expenditure.
Title: Note 2 - Program Costs Accounting Policies: Note 1 - Basis of Accounting: The accompanying Supplemental Schedule of Expenditures of Federal Awards (The "Schedule") presents the activity of all federal financial assistance programs of the Everett Housing Authority (the "Authority). The Authority's reporting entity is defined in Note 1 to the Authority's financial statements. All federal financial assistance received directly from the federal government as well as federal financial assistance that is passed through to other governmental agencies is required to be included on the Schedule. The information presented in the Schedule is presented in accordance with the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements. Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Revenue and expenses are presented on an accrual basis of accounting with the exception of fixed assets and depreciation. For purposes of the Schedule, depreciation expense is not recorded, and the cost of fixed asset additions is included as an expenditure. De Minimis Rate Used: N Rate Explanation: Note 4 - Indirect Cost Rate: The Everett Housing Authority has not elected to use the 10-percent de minimis indirect cost rate allowed under Uniform Guidance. The amounts shown on the Schedule are for current year expenditures and represent only the federal portion of the actual program costs. Actual program costs, including the Authority's portion, may be more than shown.
Title: Note 3 - Federal Loans Accounting Policies: Note 1 - Basis of Accounting: The accompanying Supplemental Schedule of Expenditures of Federal Awards (The "Schedule") presents the activity of all federal financial assistance programs of the Everett Housing Authority (the "Authority). The Authority's reporting entity is defined in Note 1 to the Authority's financial statements. All federal financial assistance received directly from the federal government as well as federal financial assistance that is passed through to other governmental agencies is required to be included on the Schedule. The information presented in the Schedule is presented in accordance with the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements. Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Revenue and expenses are presented on an accrual basis of accounting with the exception of fixed assets and depreciation. For purposes of the Schedule, depreciation expense is not recorded, and the cost of fixed asset additions is included as an expenditure. De Minimis Rate Used: N Rate Explanation: Note 4 - Indirect Cost Rate: The Everett Housing Authority has not elected to use the 10-percent de minimis indirect cost rate allowed under Uniform Guidance. Outstanding loan balances with continuing compliance requirements, including those receive and expended in prior yeas are the following: CDBG Loan: City of Everett CDBG loan for Evergreen Cottages in the amount of $539,084 with a loan term of 2020-2045. As of June 30, 2023, the balance of the loan and amount of expended proceeds is $536,235. We do not expect to draw the remaining balance of the loan.
Title: Note 4 - Indirect Cost Rate Accounting Policies: Note 1 - Basis of Accounting: The accompanying Supplemental Schedule of Expenditures of Federal Awards (The "Schedule") presents the activity of all federal financial assistance programs of the Everett Housing Authority (the "Authority). The Authority's reporting entity is defined in Note 1 to the Authority's financial statements. All federal financial assistance received directly from the federal government as well as federal financial assistance that is passed through to other governmental agencies is required to be included on the Schedule. The information presented in the Schedule is presented in accordance with the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements. Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Revenue and expenses are presented on an accrual basis of accounting with the exception of fixed assets and depreciation. For purposes of the Schedule, depreciation expense is not recorded, and the cost of fixed asset additions is included as an expenditure. De Minimis Rate Used: N Rate Explanation: Note 4 - Indirect Cost Rate: The Everett Housing Authority has not elected to use the 10-percent de minimis indirect cost rate allowed under Uniform Guidance. The Everett Housing Authority has not elected to use the 10-percent de minimis indirect cost rate allowed under Uniform Guidance.
Title: Note 5 - American Rescue Plan Act Award Funding for Emergency Housing Vouchers Accounting Policies: Note 1 - Basis of Accounting: The accompanying Supplemental Schedule of Expenditures of Federal Awards (The "Schedule") presents the activity of all federal financial assistance programs of the Everett Housing Authority (the "Authority). The Authority's reporting entity is defined in Note 1 to the Authority's financial statements. All federal financial assistance received directly from the federal government as well as federal financial assistance that is passed through to other governmental agencies is required to be included on the Schedule. The information presented in the Schedule is presented in accordance with the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements. Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Revenue and expenses are presented on an accrual basis of accounting with the exception of fixed assets and depreciation. For purposes of the Schedule, depreciation expense is not recorded, and the cost of fixed asset additions is included as an expenditure. De Minimis Rate Used: N Rate Explanation: Note 4 - Indirect Cost Rate: The Everett Housing Authority has not elected to use the 10-percent de minimis indirect cost rate allowed under Uniform Guidance. The Authority was awarded 56 Emergency Housing Vouchers funded by the American Rescue Plan Act of 2021 (Public Law No: 117-2) to provide rental assistance for individuals and families. Eligibility for these vouchers is limited to individuals and families who are (1) homeless; (2) at risk of homelessness; (3) fleeing, or attempting to flee, domestic violence, dating violence, sexual assault, stalking, or human trafficking; or (4) recently homeless and for whom providing rental assistance will prevent the family's future homelessness or having high risk of housing instability. The Emergency Housing Voucher Program operates as a separate program distinct from the regular tenant-based Housing Choice Voucher Program and provides tenant-based assistance. However, no new Assistance Listing Number (ALN) was issued for the Emergency Housing Vouchers program, therefore the supplemental funding is reported under the ALN associated with the Houcing Choice Voucher Program on the Schedule when expended. The breakout is as follows: Operating and HAP expenses are reported under ALN 14.871 "COVID 19 - Section 8 Housing Choice Vouchers" As of June 30, 2023, the Authority had expended $1,240,294.46 of the award funding for Emergency Housing Vouchers. 34 of the newly awarded vouchers had been utilized and leasing of the remaining vouchers was underway. EHA actively monitors and plans activities related to the management of our voucher counts in order to comply with HUD's leasing provisions on a calendar year basis.

Finding Details

Finding 2023-001
The Housing Authority had inadequate internal controls for ensuring compliance with Housing Quality Standards inspection requirements. Background Housing Voucher Cluster During fiscal year 2023, the Housing Authority spent $3,219,386 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP) and Mainstream Voucher program. Of the amount spent, $1,240,294 was spent on the Emergency Housing Vouchers that is not subject to Housing Quality Standards (HQS) inspection requirements for 2023 and is not included in this finding. The HCVP provides rental assistance to help families with very low incomes afford decent, safe and sanitary rental housing. The Mainstream Voucher program enables families, for whom the head, spouse, or co-head is a person with disabilities, to lease affordable private housing of their choice. Moving to Work Demonstration Program During fiscal year 2023, the Housing Authority spent $51,608,041 under the Moving to Work Demonstration Program. The purpose of the Moving to Work Demonstration Program is to give public housing agencies the flexibility to design and test various approaches for providing and administering housing assistance that: (1) reduce cost and achieve greater cost effectiveness in federal expenditures, (2) give incentives to families with children where the head of household is working, seeking work, or is preparing for work by participating in job training, educational programs, or programs that assist people to obtain employment and become economically self-sufficient, and (3) increase housing choices for low-income families. Additionally, federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition The Housing Authority must inspect units leased to families initially once a family moves in and at least once every two years to determine if they meet federal HQS requirements. Our audit found the Housing Authority did not establish effective internal controls to ensure compliance with each program’s HQS inspection requirements. Specifically, the Housing Authority did not perform timely inspections as required. Housing Voucher Cluster We consider this internal control deficiency to be a material weakness that led to material noncompliance. This issue was reported as a finding in the prior audit. Moving to Work Demonstration Program We consider this internal control deficiency to be a significant deficiency. This issue was not reported as a finding in the prior audit.   Cause of Condition The Housing Authority did not have a consistent inspector during the audit period. It also had delayed inspections in the prior audit period, which added to the list of inspections becoming due during the current audit period. Due to the large number of biennial inspections becoming due, and the lack of staffing trained on inspections, the Housing Authority was unable to ensure all units received the required biennial inspections timely. Effect of Condition Housing Voucher Cluster Using statistical sampling, we tested 26 tenant files. Our testing found 16 tenants for which the Housing Authority did not perform inspections timely. Because the Housing Authority did not perform inspections timely, it cannot demonstrate that the housing units met HQS inspection requirements. Moving to Work Demonstration Program Using statistical sampling, we tested 29 tenant files. Our testing found two tenants for which the Housing Authority did not perform inspections timely. Because the Housing Authority did not perform inspections timely, it cannot demonstrate that the housing units met HQS inspection requirements. Recommendation We recommend the Housing Authority strengthen internal controls to ensure it complies with HQS inspection requirements. Specifically, the Housing Authority should ensure inspections are being performed in accordance with federal requirements. Housing Authority’s Response Everett Housing Authority acknowledges the above-referenced finding. The agency’s lack of internal controls to ensure compliance with the requirement to conduct HQS inspections was first identified during the audit for the time period from July 1, 2021 to June 30, 2022. As discussed more fully in EHA’s response to the finding last year, multiple factors resulted in this finding, including a lack of staff and contract capacity. Since EHA received the audit finding last year related to inadequate internal controls over HQS, the agency has undertaken measures to increase internal controls and capacity to conduct inspections and take other corrective actions within the required time frame, including: • Developing and implementing a plan to transition from reliance on contract inspectors to hiring an in-house inspections team to conduct required HQS inspections. • Hiring and training three Housing Inspectors, with the first hired on January 5, 2023. • Hiring, and training an Inspections Coordinator, who is responsible for the scheduling and communications aspects of inspections compliance, including compliance with the requirements to correct deficiencies within specified time frames. • Training 25 property management staff in the Housing Management department to conduct initial and biennial inspections of the Project-Based Voucher units that EHA owns and operates, starting July 1, 2023. • Assigned oversight of the four inspections staff to an HCV Manager, to increase direct oversight of their work. As a result of these measures, EHA has made significant progress in catching up on late inspections and we expect to be in full compliance with inspection requirements applicable to the voucher program no later than December 31, 2024. Auditor’s Remarks We appreciate the Housing Authority’s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review the corrective action taken during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 405, PHA initial and periodic unit inspection, establishes inspection requirements for housing quality standards.
Finding 2023-001
The Housing Authority had inadequate internal controls for ensuring compliance with Housing Quality Standards inspection requirements. Background Housing Voucher Cluster During fiscal year 2023, the Housing Authority spent $3,219,386 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP) and Mainstream Voucher program. Of the amount spent, $1,240,294 was spent on the Emergency Housing Vouchers that is not subject to Housing Quality Standards (HQS) inspection requirements for 2023 and is not included in this finding. The HCVP provides rental assistance to help families with very low incomes afford decent, safe and sanitary rental housing. The Mainstream Voucher program enables families, for whom the head, spouse, or co-head is a person with disabilities, to lease affordable private housing of their choice. Moving to Work Demonstration Program During fiscal year 2023, the Housing Authority spent $51,608,041 under the Moving to Work Demonstration Program. The purpose of the Moving to Work Demonstration Program is to give public housing agencies the flexibility to design and test various approaches for providing and administering housing assistance that: (1) reduce cost and achieve greater cost effectiveness in federal expenditures, (2) give incentives to families with children where the head of household is working, seeking work, or is preparing for work by participating in job training, educational programs, or programs that assist people to obtain employment and become economically self-sufficient, and (3) increase housing choices for low-income families. Additionally, federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition The Housing Authority must inspect units leased to families initially once a family moves in and at least once every two years to determine if they meet federal HQS requirements. Our audit found the Housing Authority did not establish effective internal controls to ensure compliance with each program’s HQS inspection requirements. Specifically, the Housing Authority did not perform timely inspections as required. Housing Voucher Cluster We consider this internal control deficiency to be a material weakness that led to material noncompliance. This issue was reported as a finding in the prior audit. Moving to Work Demonstration Program We consider this internal control deficiency to be a significant deficiency. This issue was not reported as a finding in the prior audit.   Cause of Condition The Housing Authority did not have a consistent inspector during the audit period. It also had delayed inspections in the prior audit period, which added to the list of inspections becoming due during the current audit period. Due to the large number of biennial inspections becoming due, and the lack of staffing trained on inspections, the Housing Authority was unable to ensure all units received the required biennial inspections timely. Effect of Condition Housing Voucher Cluster Using statistical sampling, we tested 26 tenant files. Our testing found 16 tenants for which the Housing Authority did not perform inspections timely. Because the Housing Authority did not perform inspections timely, it cannot demonstrate that the housing units met HQS inspection requirements. Moving to Work Demonstration Program Using statistical sampling, we tested 29 tenant files. Our testing found two tenants for which the Housing Authority did not perform inspections timely. Because the Housing Authority did not perform inspections timely, it cannot demonstrate that the housing units met HQS inspection requirements. Recommendation We recommend the Housing Authority strengthen internal controls to ensure it complies with HQS inspection requirements. Specifically, the Housing Authority should ensure inspections are being performed in accordance with federal requirements. Housing Authority’s Response Everett Housing Authority acknowledges the above-referenced finding. The agency’s lack of internal controls to ensure compliance with the requirement to conduct HQS inspections was first identified during the audit for the time period from July 1, 2021 to June 30, 2022. As discussed more fully in EHA’s response to the finding last year, multiple factors resulted in this finding, including a lack of staff and contract capacity. Since EHA received the audit finding last year related to inadequate internal controls over HQS, the agency has undertaken measures to increase internal controls and capacity to conduct inspections and take other corrective actions within the required time frame, including: • Developing and implementing a plan to transition from reliance on contract inspectors to hiring an in-house inspections team to conduct required HQS inspections. • Hiring and training three Housing Inspectors, with the first hired on January 5, 2023. • Hiring, and training an Inspections Coordinator, who is responsible for the scheduling and communications aspects of inspections compliance, including compliance with the requirements to correct deficiencies within specified time frames. • Training 25 property management staff in the Housing Management department to conduct initial and biennial inspections of the Project-Based Voucher units that EHA owns and operates, starting July 1, 2023. • Assigned oversight of the four inspections staff to an HCV Manager, to increase direct oversight of their work. As a result of these measures, EHA has made significant progress in catching up on late inspections and we expect to be in full compliance with inspection requirements applicable to the voucher program no later than December 31, 2024. Auditor’s Remarks We appreciate the Housing Authority’s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review the corrective action taken during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 405, PHA initial and periodic unit inspection, establishes inspection requirements for housing quality standards.
Finding 2023-001
The Housing Authority had inadequate internal controls for ensuring compliance with Housing Quality Standards inspection requirements. Background Housing Voucher Cluster During fiscal year 2023, the Housing Authority spent $3,219,386 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP) and Mainstream Voucher program. Of the amount spent, $1,240,294 was spent on the Emergency Housing Vouchers that is not subject to Housing Quality Standards (HQS) inspection requirements for 2023 and is not included in this finding. The HCVP provides rental assistance to help families with very low incomes afford decent, safe and sanitary rental housing. The Mainstream Voucher program enables families, for whom the head, spouse, or co-head is a person with disabilities, to lease affordable private housing of their choice. Moving to Work Demonstration Program During fiscal year 2023, the Housing Authority spent $51,608,041 under the Moving to Work Demonstration Program. The purpose of the Moving to Work Demonstration Program is to give public housing agencies the flexibility to design and test various approaches for providing and administering housing assistance that: (1) reduce cost and achieve greater cost effectiveness in federal expenditures, (2) give incentives to families with children where the head of household is working, seeking work, or is preparing for work by participating in job training, educational programs, or programs that assist people to obtain employment and become economically self-sufficient, and (3) increase housing choices for low-income families. Additionally, federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition The Housing Authority must inspect units leased to families initially once a family moves in and at least once every two years to determine if they meet federal HQS requirements. Our audit found the Housing Authority did not establish effective internal controls to ensure compliance with each program’s HQS inspection requirements. Specifically, the Housing Authority did not perform timely inspections as required. Housing Voucher Cluster We consider this internal control deficiency to be a material weakness that led to material noncompliance. This issue was reported as a finding in the prior audit. Moving to Work Demonstration Program We consider this internal control deficiency to be a significant deficiency. This issue was not reported as a finding in the prior audit.   Cause of Condition The Housing Authority did not have a consistent inspector during the audit period. It also had delayed inspections in the prior audit period, which added to the list of inspections becoming due during the current audit period. Due to the large number of biennial inspections becoming due, and the lack of staffing trained on inspections, the Housing Authority was unable to ensure all units received the required biennial inspections timely. Effect of Condition Housing Voucher Cluster Using statistical sampling, we tested 26 tenant files. Our testing found 16 tenants for which the Housing Authority did not perform inspections timely. Because the Housing Authority did not perform inspections timely, it cannot demonstrate that the housing units met HQS inspection requirements. Moving to Work Demonstration Program Using statistical sampling, we tested 29 tenant files. Our testing found two tenants for which the Housing Authority did not perform inspections timely. Because the Housing Authority did not perform inspections timely, it cannot demonstrate that the housing units met HQS inspection requirements. Recommendation We recommend the Housing Authority strengthen internal controls to ensure it complies with HQS inspection requirements. Specifically, the Housing Authority should ensure inspections are being performed in accordance with federal requirements. Housing Authority’s Response Everett Housing Authority acknowledges the above-referenced finding. The agency’s lack of internal controls to ensure compliance with the requirement to conduct HQS inspections was first identified during the audit for the time period from July 1, 2021 to June 30, 2022. As discussed more fully in EHA’s response to the finding last year, multiple factors resulted in this finding, including a lack of staff and contract capacity. Since EHA received the audit finding last year related to inadequate internal controls over HQS, the agency has undertaken measures to increase internal controls and capacity to conduct inspections and take other corrective actions within the required time frame, including: • Developing and implementing a plan to transition from reliance on contract inspectors to hiring an in-house inspections team to conduct required HQS inspections. • Hiring and training three Housing Inspectors, with the first hired on January 5, 2023. • Hiring, and training an Inspections Coordinator, who is responsible for the scheduling and communications aspects of inspections compliance, including compliance with the requirements to correct deficiencies within specified time frames. • Training 25 property management staff in the Housing Management department to conduct initial and biennial inspections of the Project-Based Voucher units that EHA owns and operates, starting July 1, 2023. • Assigned oversight of the four inspections staff to an HCV Manager, to increase direct oversight of their work. As a result of these measures, EHA has made significant progress in catching up on late inspections and we expect to be in full compliance with inspection requirements applicable to the voucher program no later than December 31, 2024. Auditor’s Remarks We appreciate the Housing Authority’s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review the corrective action taken during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 405, PHA initial and periodic unit inspection, establishes inspection requirements for housing quality standards.
Finding 2023-001
The Housing Authority had inadequate internal controls for ensuring compliance with Housing Quality Standards inspection requirements. Background Housing Voucher Cluster During fiscal year 2023, the Housing Authority spent $3,219,386 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP) and Mainstream Voucher program. Of the amount spent, $1,240,294 was spent on the Emergency Housing Vouchers that is not subject to Housing Quality Standards (HQS) inspection requirements for 2023 and is not included in this finding. The HCVP provides rental assistance to help families with very low incomes afford decent, safe and sanitary rental housing. The Mainstream Voucher program enables families, for whom the head, spouse, or co-head is a person with disabilities, to lease affordable private housing of their choice. Moving to Work Demonstration Program During fiscal year 2023, the Housing Authority spent $51,608,041 under the Moving to Work Demonstration Program. The purpose of the Moving to Work Demonstration Program is to give public housing agencies the flexibility to design and test various approaches for providing and administering housing assistance that: (1) reduce cost and achieve greater cost effectiveness in federal expenditures, (2) give incentives to families with children where the head of household is working, seeking work, or is preparing for work by participating in job training, educational programs, or programs that assist people to obtain employment and become economically self-sufficient, and (3) increase housing choices for low-income families. Additionally, federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition The Housing Authority must inspect units leased to families initially once a family moves in and at least once every two years to determine if they meet federal HQS requirements. Our audit found the Housing Authority did not establish effective internal controls to ensure compliance with each program’s HQS inspection requirements. Specifically, the Housing Authority did not perform timely inspections as required. Housing Voucher Cluster We consider this internal control deficiency to be a material weakness that led to material noncompliance. This issue was reported as a finding in the prior audit. Moving to Work Demonstration Program We consider this internal control deficiency to be a significant deficiency. This issue was not reported as a finding in the prior audit.   Cause of Condition The Housing Authority did not have a consistent inspector during the audit period. It also had delayed inspections in the prior audit period, which added to the list of inspections becoming due during the current audit period. Due to the large number of biennial inspections becoming due, and the lack of staffing trained on inspections, the Housing Authority was unable to ensure all units received the required biennial inspections timely. Effect of Condition Housing Voucher Cluster Using statistical sampling, we tested 26 tenant files. Our testing found 16 tenants for which the Housing Authority did not perform inspections timely. Because the Housing Authority did not perform inspections timely, it cannot demonstrate that the housing units met HQS inspection requirements. Moving to Work Demonstration Program Using statistical sampling, we tested 29 tenant files. Our testing found two tenants for which the Housing Authority did not perform inspections timely. Because the Housing Authority did not perform inspections timely, it cannot demonstrate that the housing units met HQS inspection requirements. Recommendation We recommend the Housing Authority strengthen internal controls to ensure it complies with HQS inspection requirements. Specifically, the Housing Authority should ensure inspections are being performed in accordance with federal requirements. Housing Authority’s Response Everett Housing Authority acknowledges the above-referenced finding. The agency’s lack of internal controls to ensure compliance with the requirement to conduct HQS inspections was first identified during the audit for the time period from July 1, 2021 to June 30, 2022. As discussed more fully in EHA’s response to the finding last year, multiple factors resulted in this finding, including a lack of staff and contract capacity. Since EHA received the audit finding last year related to inadequate internal controls over HQS, the agency has undertaken measures to increase internal controls and capacity to conduct inspections and take other corrective actions within the required time frame, including: • Developing and implementing a plan to transition from reliance on contract inspectors to hiring an in-house inspections team to conduct required HQS inspections. • Hiring and training three Housing Inspectors, with the first hired on January 5, 2023. • Hiring, and training an Inspections Coordinator, who is responsible for the scheduling and communications aspects of inspections compliance, including compliance with the requirements to correct deficiencies within specified time frames. • Training 25 property management staff in the Housing Management department to conduct initial and biennial inspections of the Project-Based Voucher units that EHA owns and operates, starting July 1, 2023. • Assigned oversight of the four inspections staff to an HCV Manager, to increase direct oversight of their work. As a result of these measures, EHA has made significant progress in catching up on late inspections and we expect to be in full compliance with inspection requirements applicable to the voucher program no later than December 31, 2024. Auditor’s Remarks We appreciate the Housing Authority’s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review the corrective action taken during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 405, PHA initial and periodic unit inspection, establishes inspection requirements for housing quality standards.
Finding 2023-001
The Housing Authority had inadequate internal controls for ensuring compliance with Housing Quality Standards inspection requirements. Background Housing Voucher Cluster During fiscal year 2023, the Housing Authority spent $3,219,386 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP) and Mainstream Voucher program. Of the amount spent, $1,240,294 was spent on the Emergency Housing Vouchers that is not subject to Housing Quality Standards (HQS) inspection requirements for 2023 and is not included in this finding. The HCVP provides rental assistance to help families with very low incomes afford decent, safe and sanitary rental housing. The Mainstream Voucher program enables families, for whom the head, spouse, or co-head is a person with disabilities, to lease affordable private housing of their choice. Moving to Work Demonstration Program During fiscal year 2023, the Housing Authority spent $51,608,041 under the Moving to Work Demonstration Program. The purpose of the Moving to Work Demonstration Program is to give public housing agencies the flexibility to design and test various approaches for providing and administering housing assistance that: (1) reduce cost and achieve greater cost effectiveness in federal expenditures, (2) give incentives to families with children where the head of household is working, seeking work, or is preparing for work by participating in job training, educational programs, or programs that assist people to obtain employment and become economically self-sufficient, and (3) increase housing choices for low-income families. Additionally, federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition The Housing Authority must inspect units leased to families initially once a family moves in and at least once every two years to determine if they meet federal HQS requirements. Our audit found the Housing Authority did not establish effective internal controls to ensure compliance with each program’s HQS inspection requirements. Specifically, the Housing Authority did not perform timely inspections as required. Housing Voucher Cluster We consider this internal control deficiency to be a material weakness that led to material noncompliance. This issue was reported as a finding in the prior audit. Moving to Work Demonstration Program We consider this internal control deficiency to be a significant deficiency. This issue was not reported as a finding in the prior audit.   Cause of Condition The Housing Authority did not have a consistent inspector during the audit period. It also had delayed inspections in the prior audit period, which added to the list of inspections becoming due during the current audit period. Due to the large number of biennial inspections becoming due, and the lack of staffing trained on inspections, the Housing Authority was unable to ensure all units received the required biennial inspections timely. Effect of Condition Housing Voucher Cluster Using statistical sampling, we tested 26 tenant files. Our testing found 16 tenants for which the Housing Authority did not perform inspections timely. Because the Housing Authority did not perform inspections timely, it cannot demonstrate that the housing units met HQS inspection requirements. Moving to Work Demonstration Program Using statistical sampling, we tested 29 tenant files. Our testing found two tenants for which the Housing Authority did not perform inspections timely. Because the Housing Authority did not perform inspections timely, it cannot demonstrate that the housing units met HQS inspection requirements. Recommendation We recommend the Housing Authority strengthen internal controls to ensure it complies with HQS inspection requirements. Specifically, the Housing Authority should ensure inspections are being performed in accordance with federal requirements. Housing Authority’s Response Everett Housing Authority acknowledges the above-referenced finding. The agency’s lack of internal controls to ensure compliance with the requirement to conduct HQS inspections was first identified during the audit for the time period from July 1, 2021 to June 30, 2022. As discussed more fully in EHA’s response to the finding last year, multiple factors resulted in this finding, including a lack of staff and contract capacity. Since EHA received the audit finding last year related to inadequate internal controls over HQS, the agency has undertaken measures to increase internal controls and capacity to conduct inspections and take other corrective actions within the required time frame, including: • Developing and implementing a plan to transition from reliance on contract inspectors to hiring an in-house inspections team to conduct required HQS inspections. • Hiring and training three Housing Inspectors, with the first hired on January 5, 2023. • Hiring, and training an Inspections Coordinator, who is responsible for the scheduling and communications aspects of inspections compliance, including compliance with the requirements to correct deficiencies within specified time frames. • Training 25 property management staff in the Housing Management department to conduct initial and biennial inspections of the Project-Based Voucher units that EHA owns and operates, starting July 1, 2023. • Assigned oversight of the four inspections staff to an HCV Manager, to increase direct oversight of their work. As a result of these measures, EHA has made significant progress in catching up on late inspections and we expect to be in full compliance with inspection requirements applicable to the voucher program no later than December 31, 2024. Auditor’s Remarks We appreciate the Housing Authority’s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review the corrective action taken during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 405, PHA initial and periodic unit inspection, establishes inspection requirements for housing quality standards.
Finding 2023-001
The Housing Authority had inadequate internal controls for ensuring compliance with Housing Quality Standards inspection requirements. Background Housing Voucher Cluster During fiscal year 2023, the Housing Authority spent $3,219,386 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP) and Mainstream Voucher program. Of the amount spent, $1,240,294 was spent on the Emergency Housing Vouchers that is not subject to Housing Quality Standards (HQS) inspection requirements for 2023 and is not included in this finding. The HCVP provides rental assistance to help families with very low incomes afford decent, safe and sanitary rental housing. The Mainstream Voucher program enables families, for whom the head, spouse, or co-head is a person with disabilities, to lease affordable private housing of their choice. Moving to Work Demonstration Program During fiscal year 2023, the Housing Authority spent $51,608,041 under the Moving to Work Demonstration Program. The purpose of the Moving to Work Demonstration Program is to give public housing agencies the flexibility to design and test various approaches for providing and administering housing assistance that: (1) reduce cost and achieve greater cost effectiveness in federal expenditures, (2) give incentives to families with children where the head of household is working, seeking work, or is preparing for work by participating in job training, educational programs, or programs that assist people to obtain employment and become economically self-sufficient, and (3) increase housing choices for low-income families. Additionally, federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Description of Condition The Housing Authority must inspect units leased to families initially once a family moves in and at least once every two years to determine if they meet federal HQS requirements. Our audit found the Housing Authority did not establish effective internal controls to ensure compliance with each program’s HQS inspection requirements. Specifically, the Housing Authority did not perform timely inspections as required. Housing Voucher Cluster We consider this internal control deficiency to be a material weakness that led to material noncompliance. This issue was reported as a finding in the prior audit. Moving to Work Demonstration Program We consider this internal control deficiency to be a significant deficiency. This issue was not reported as a finding in the prior audit.   Cause of Condition The Housing Authority did not have a consistent inspector during the audit period. It also had delayed inspections in the prior audit period, which added to the list of inspections becoming due during the current audit period. Due to the large number of biennial inspections becoming due, and the lack of staffing trained on inspections, the Housing Authority was unable to ensure all units received the required biennial inspections timely. Effect of Condition Housing Voucher Cluster Using statistical sampling, we tested 26 tenant files. Our testing found 16 tenants for which the Housing Authority did not perform inspections timely. Because the Housing Authority did not perform inspections timely, it cannot demonstrate that the housing units met HQS inspection requirements. Moving to Work Demonstration Program Using statistical sampling, we tested 29 tenant files. Our testing found two tenants for which the Housing Authority did not perform inspections timely. Because the Housing Authority did not perform inspections timely, it cannot demonstrate that the housing units met HQS inspection requirements. Recommendation We recommend the Housing Authority strengthen internal controls to ensure it complies with HQS inspection requirements. Specifically, the Housing Authority should ensure inspections are being performed in accordance with federal requirements. Housing Authority’s Response Everett Housing Authority acknowledges the above-referenced finding. The agency’s lack of internal controls to ensure compliance with the requirement to conduct HQS inspections was first identified during the audit for the time period from July 1, 2021 to June 30, 2022. As discussed more fully in EHA’s response to the finding last year, multiple factors resulted in this finding, including a lack of staff and contract capacity. Since EHA received the audit finding last year related to inadequate internal controls over HQS, the agency has undertaken measures to increase internal controls and capacity to conduct inspections and take other corrective actions within the required time frame, including: • Developing and implementing a plan to transition from reliance on contract inspectors to hiring an in-house inspections team to conduct required HQS inspections. • Hiring and training three Housing Inspectors, with the first hired on January 5, 2023. • Hiring, and training an Inspections Coordinator, who is responsible for the scheduling and communications aspects of inspections compliance, including compliance with the requirements to correct deficiencies within specified time frames. • Training 25 property management staff in the Housing Management department to conduct initial and biennial inspections of the Project-Based Voucher units that EHA owns and operates, starting July 1, 2023. • Assigned oversight of the four inspections staff to an HCV Manager, to increase direct oversight of their work. As a result of these measures, EHA has made significant progress in catching up on late inspections and we expect to be in full compliance with inspection requirements applicable to the voucher program no later than December 31, 2024. Auditor’s Remarks We appreciate the Housing Authority’s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review the corrective action taken during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 405, PHA initial and periodic unit inspection, establishes inspection requirements for housing quality standards.