2021-002- Missing Reports (MW, NC}
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Section 8 Housing Choice Vouchers
14.871
U.S. Department of Housing and Urban Development
Not applicable
CA-071 - 2021
Reporting
Criteria: The Office of Management and Budget 2021 Compliance Supplement states that the following
reports are required to be submitted to the U.S. Department of Housing and Urban Development.
HUD-52681-B, Voucher for Payment of Annual Contributions and Operating Statement (0MB No.
2577-0169). The PHA submits this form monthly to HUD electronically via the VMS. Congress has
instructed HUD to use VMS data to determine renewal funding levels. HUD also uses VMS data for
other funding, monitoring, and SEMAP-related decisions. HUD relies on the audit of the key line items
below to determine the reasonableness of the data submitted for the purposes of calculating funding
under the program.
Financial Reports (0MB No. 2535-0107)-Financial Assessment Subsystem, FASS-PH. The Uniform
Financial Reporting Standards (24 CFR section 5.801) require PHAs to submit timely GAAP-based
unaudited and audited financial information electronically to HUD. The FASS-PH system is one of
HU D's main monitoring and oversight systems for the HCVP.
HUD-52648, SEMAP Certification - PHAs with jurisdiction in metropolitan Fair Market Rent areas have
the option of submitting data to HUD with their annual SEMAP certifications on the percent of their tenantbased
Section 8 families with children who live in and who have moved during the PHA fiscal year to low
poverty census tracts in the PHA's principal operating area. Submission of this information with the
SEMAP certification makes the PHA eligible for bonus points under SEMAP (24 CFR section 985.3(h)).
HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-Income
Persons (0MB No. 2529-0043) - Each recipient that administers covered public and Indian housing
assistance, regardless of the amount expended, and each recipient that administers covered housing
and community development assistance in excess of $200,000 in a program year, must submit HUD
60002 information using the automated Section 3 Performance Evaluation and Registry System
(SPEARS) (24 CFR sections 135.3(a)(1) and 135.90).
HUD-50058, Family Report (0MB 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).
Condition: We were unable to obtain the following reports: HUD-52681-B, FASS-PH, and HUD-52648.
Cause: Turnover of staff in the Housing Authority and delay in recruitment. Lack of internal control over
the retention of program reports.
Effect or Potential Effect: The City is facing sanctions from the Office of Inspector General (OIG) with
a reduced Section 8 Management Assessment Program (SEMAP) rating from High Performer to
Standard Performer. A reduced rating may result in HUD withholding additional grant funds or offset the
Housing Choice Voucher (HCV) administrative fees.
Questioned Cost: None.
(MW) - Material Weakness (SD) - Significant Deficiency (NC) - Noncompliance
-12-
Context: The Housing Authority did not provide required reports.
Statistical Sampling Validity: Not applicable.
Repeat of a Prior-Year Finding: 2020-001, 2019-005, 2018-007
Recommendation: We recommend the City establish policies and procedures that will ensure the
retention of program documents.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The City Controller's Office drafted a grants policy that is currently under
review by City Management. Community development staff will ensure a succession plan is in
place for any staff turnover and for report preparation compliance.
Planned Implementation Date: December 31, 2024
Responsible Person(s): City Manager, Community Development Director, and City Controller
2021-003- Incorrect Payrates {SD)
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Section 8 Housing Choice Vouchers
14.871
U.S. Department of Housing and Urban Development
Not applicable
CA-071 - 2021
Allowable Costs/Cost Principles
Criteria: Title 2, Subtitle A, Chapter II, Part 200, General Provisions for Selected Items of Cost, Section
200.430, Compensation - Personal Services requires that costs of compensation are allowable to the
extent that they satisfy specific requirements which in include that the total compensation of individual
employees is determined and supported as provided in the Standards for Documentation of Personnel
Expenses. The said standards require charges to Federal awards for salaries and wages must be based
on records that must be supported by a system of internal control which provides reasonable assurance
that the charges are accurate, allowable, and properly allocated.
Condition: The City uses personnel action forms (PA 101) to document the approved payrates of City
employees. During our audit, we noted that the payrates used to determine the amounts claimed for
payroll costs associated with the program were lower than what was reflected in the PA 101 form.
Cause: The City approved retroactive pay increases for employees and the pay increases were
processed as lump sum adjustments. The payroll records prior to the approval of the retroactive pay
were not adjusted to reflect the change. The program costs were not adjusted either.
Effect or Potential Effect: The City missed the opportunity to claim higher payroll costs to the program.
Questioned Cost: None.
Context: Six instances of incorrect payrates were found out of 20 sample items. Since the costs claimed
were lower than what they should have been, no questioned cost is reported.
Statistical Sampling Validity: Samples are haphazardly selected.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City improve procedures to ensure that payrate changes are
approved timely and payroll costs charged to the grant are also adjusted whenever payrate changes are
approved.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The general accounting policy will be updated for the accountant to check
the payroll register to accrue retroactive pay changes to the correct period.
Planned Implementation Date: June 30, 2024
Responsible Person(s): City Controller
2021-004- Distribution of Hours Worked (NC}
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Section 8 Housing Choice Vouchers
14.871
U.S. Department of Housing and Urban Development
Not applicable
CA-071 - 2021
Allowable CosUCost Principles
Criteria: Title 2, Subtitle A, Chapter II, Part 200, General Provisions for Selected Items of Cost, Section
200.430, Compensation - Personal Services requires that costs of compensation are allowable to the
extent that they satisfy specific requirements which in include that the total compensation of individual
employees is determined and supported as provided in the Standards for Documentation of Personnel
Expenses. The said standards require charges to Federal awards for salaries and wages must be based
on records that must be supported by a system of internal control which provides reasonable assurance
that the charges are accurate, allowable, and properly allocated.
Federal award recipients should support the distribution of the employee's salary or wages among
specific activities or cost objectives if the employee works on more than one Federal award; a Federal
award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect
activities which are allocated using different allocation bases; or an unallowable activity and a direct or
indirect cost activity.
Condition: If an employee works on more than one program or fund, the employee's salary or wages
and benefits are distributed by the City to the respective programs or funds based on the number of hours
worked. The basis for the distribution is the employee's timecard. During our audit, we noted one
employee's timecard did not indicate the number of hours worked for Section 8 or another program/fund,
however only 10% of his/her payroll cost was charged to Section 8.
Cause: The City was unable to provide the timecard that showed the hours worked by the employee by
program/fund.
Effect or Potential Effect: Over or understatement of payroll cost charged to the program.
Questioned Cost: None.
Context: One exception out of 20 sample items.
Statistical Sampling Validity: Samples are haphazardly selected.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend that the City improve procedures to ensure that they retain all
timecards that reflect the distribution of costs to programs/funds and make them available for the auditors.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The payroll policy will be updated to require that timecards be updated
with supervisor signature if changes are made to change allocation to another fund.
Planned Implementation Date: June 30, 2024
Responsible Person(s): City Controller
2021-005- Housing Quality Standards Inspection {NC)
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Section 8 Housing Choice Vouchers
14.871
U.S. Department of Housing and Urban Development
Not applicable
CA-071 - 2021
Special Tests and Provisions
Criteria: The public housing agency (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.
Condition: In one instance, the City did not perform the required annual inspection.
Cause: We were informed that the HUD system did not release the address for inspection so no
inspection was performed.
Effect or Potential Effect: The City's failure to comply with stated requirements exposes the City to
sanctions from the federal agency, including loss of funding.
Questioned Cost: None
Context: The exception was noted in one out of 60 participants tested. The City has noted that they
will investigate the issue.
Statistical Sampling Validity: Samples are haphazardly selected.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City to improve procedures to ensure that all annual inspections
are performed.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: Policies will be enforced or monitored more closely by Housing Authority
management to ensure all inspections and re-inspections are complete and documented.
Planned Implementation Date: December 31, 2024
Responsible Person(s): Community Development Director
2021-007- Missing Reports (SD, NC)
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Community Development Block GranUEntitlement Grants
14.218
U.S. Department of Housing and Urban Development
No applicable
B-19-MC-06-0515 - 2019
Reporting
Criteria: The Office of Management and Budget 2021 Compliance Supplement states that the following
reports are required to be submitted to the U.S. Department of Housing and Urban Development.
SF-425, Federal Financial Report - Applicable (cash status only) (this is the IDIS C04PR29 Cash on
Hand Quarterly Report made available in IDIS on August 12, 2019, which allows grantees to generate
this report by custom date ranges and export data to Excel and PDF)
Integrated Disbursement and Information System (/DIS) (0MB No. 25060077) - Grantees may include
reports generated by IDIS as part of their annual performance and evaluation report that must be
submitted for the CDBG Entitlement program 90 days after the end of a grantee's program year.
(1) C04PR03 - Activity Summary Report
(2) C04PR26 - CDBG Financial Summary Report
(3) C04PR26 - CDBG-CV Financial Summary Report
(4) C04PR26 - CDBG Activity Summary by Selected Grant
Section 3 of the Housing and Urban Development Act of 1968 - The purpose of Section 3 is to ensure
that employment and other economic opportunities generated by certain HUD financial assistance shall,
to the greatest extent feasible, and consistent with existing federal, state, and local laws and regulations,
be directed to low-and very low-income persons, particularly those who are recipients of government
assistance for housing, and to business concerns which provide economic opportunities to low-and very
low-income persons. Section 3 projects are housing rehabilitation, housing construction, and other public
construction projects assisted under HUD programs that provide housing and community development
financial assistance when the total amount of assistance to the project exceeds a threshold of $200,000.
Consolidated Annual Performance and Evaluation Report (CAPER) (24 CFR 91.520) -- A grantee's
CAPER, submitted through the IDIS e-Con Planning Suite, is due 90 days after the close of a jurisdiction's
program year.
Condition: We were unable to obtain the following reports: SF-425, Section 3 report and CAPER.
Cause: Turnover of staff and lack of internal control over the retention of program reports.
Effect or Potential Effect: The City's failure to comply with stated reporting requirements exposes the
City to sanctions from the federal agency, including loss of funding.
Questioned Cost: None
Context: The City did not provide the abovementioned reports.
Statistical Sampling Validity: Not applicable.
Repeat of a Prior-Year Finding: Yes, 2019-001, 2018-001
Recommendation: We recommend the City establish policies and procedures that will ensure the
retention of program reports.
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The City Controller drafted a grants policy which is currently under review
by the City Manager, that includes succession planning in case of staff turnover and parameters for
grant reporting compliance.
Planned Implementation Date: December 31, 2024
Responsible Person(s): City Manager, Grants Manager
2021-008- Incorrect Payrate and Hours Worked (SD)
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Community Development Block GranUEntitlement Grants
14.218
U.S. Department of Housing and Urban Development
No applicable
B-19-MC-06-0515 - 2019
Allowable CosUCost Principles
Criteria: Title 2, Subtitle A, Chapter II, Part 200, General Provisions for Selected Items of Cost, Section
200.430, Compensation - Personal Services requires that costs of compensation are allowable to the
extent that they satisfy specific requirements which in include that the total compensation of individual
employees is determined and supported as provided in the Standards for Documentation of Personnel
Expenses. The said standards require charges to Federal awards for salaries and wages must be based
on records that must be supported by a system of internal control which provides reasonable assurance
that the charges are accurate, allowable, and properly allocated.
Condition: During our audit, we found one instance where the employee's timecard did not reflect the
number of hours worked for CDBG and another instance where the employee's payrate did not agree to
the payrate stated on the personnel action form (PA 101 ).
Cause: For the exception related to timecard: The City was unable to provide the timecard that showed
the hours worked by the employee by program/fund.
For the exception related to payrate: The City approved retroactive pay increases for employees and the
pay increases were processed as lump sum adjustments. The payroll records prior to the approval of
the retroactive pay were not adjusted to reflect the change. The program costs were not adjusted either.
Effect or Potential Effect: Over or understatement of costs charged to the program.
Questioned Cost: None
Context: One exception related to timecard and another exception related to payrate were found, out
of 20 items selected.
Statistical Sampling Validity: Samples are haphazardly selected.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City improve procedures to ensure completeness and accuracy
of payroll costs charged to federal programs.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The general accounting policy will be updated for the accountant to check
the payroll register to accrue retroactive pay changes to the correct period. The payroll policy will
also be updated to require that timecards be updated with supervisor signature if changes are made
to change allocation to another fund.
Planned Implementation Date: June 30, 2024
Responsible Person(s): City Controller
2021-006- Incorrect Payrates {SD, NC)
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Coronavirus Relief Fund
21.019
U.S. Department of the Treasury
CA Department of Finance
N/A-2021
Allowable Costs/Cost Principles
Criteria: Title 2, Subtitle A, Chapter II, Part 200, General Provisions for Selected Items of Cost, Section
200.430, Compensation - Personal Services requires that costs of compensation are allowable to the
extent that they satisfy specific requirements which in include that the total compensation of individual
employees is determined and supported as provided in the Standards for Documentation of Personnel
Expenses. The said standards require charges to Federal awards for salaries and wages must be based
on records that must be supported by a system of internal control which provides reasonable assurance
that the charges are accurate, allowable, and properly allocated.
Condition: The City used incorrect payrates when calculating payroll costs charged to the program.
Cause: When the City calculated the Fire Department payroll and payroll costs related to Covid Leave,
they used a report that reflected payrates that were higher than what the payroll register reported.
Effect or Potential Effect: The City overstated the payroll costs charged to the program.
Questioned Cost: $32,314
Context: The exception was found in 10 out of 28 employees selected. The questioned cost is the
amount projected to the entire population.
Statistical Sampling Validity: Samples are haphazardly selected.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City enhance procedures to double check the payrates used
when calculating charges to federal awards.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The City has other eligible costs that were not claimed for this grant that
can be used to offset the questioned cost. Procedures are already in place to enhance payrate
calculations in the future.
Planned Implementation Date: Implemented as of April 2024
Responsible Person(s): City Controller
2021-002- Missing Reports (MW, NC}
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Section 8 Housing Choice Vouchers
14.871
U.S. Department of Housing and Urban Development
Not applicable
CA-071 - 2021
Reporting
Criteria: The Office of Management and Budget 2021 Compliance Supplement states that the following
reports are required to be submitted to the U.S. Department of Housing and Urban Development.
HUD-52681-B, Voucher for Payment of Annual Contributions and Operating Statement (0MB No.
2577-0169). The PHA submits this form monthly to HUD electronically via the VMS. Congress has
instructed HUD to use VMS data to determine renewal funding levels. HUD also uses VMS data for
other funding, monitoring, and SEMAP-related decisions. HUD relies on the audit of the key line items
below to determine the reasonableness of the data submitted for the purposes of calculating funding
under the program.
Financial Reports (0MB No. 2535-0107)-Financial Assessment Subsystem, FASS-PH. The Uniform
Financial Reporting Standards (24 CFR section 5.801) require PHAs to submit timely GAAP-based
unaudited and audited financial information electronically to HUD. The FASS-PH system is one of
HU D's main monitoring and oversight systems for the HCVP.
HUD-52648, SEMAP Certification - PHAs with jurisdiction in metropolitan Fair Market Rent areas have
the option of submitting data to HUD with their annual SEMAP certifications on the percent of their tenantbased
Section 8 families with children who live in and who have moved during the PHA fiscal year to low
poverty census tracts in the PHA's principal operating area. Submission of this information with the
SEMAP certification makes the PHA eligible for bonus points under SEMAP (24 CFR section 985.3(h)).
HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-Income
Persons (0MB No. 2529-0043) - Each recipient that administers covered public and Indian housing
assistance, regardless of the amount expended, and each recipient that administers covered housing
and community development assistance in excess of $200,000 in a program year, must submit HUD
60002 information using the automated Section 3 Performance Evaluation and Registry System
(SPEARS) (24 CFR sections 135.3(a)(1) and 135.90).
HUD-50058, Family Report (0MB 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).
Condition: We were unable to obtain the following reports: HUD-52681-B, FASS-PH, and HUD-52648.
Cause: Turnover of staff in the Housing Authority and delay in recruitment. Lack of internal control over
the retention of program reports.
Effect or Potential Effect: The City is facing sanctions from the Office of Inspector General (OIG) with
a reduced Section 8 Management Assessment Program (SEMAP) rating from High Performer to
Standard Performer. A reduced rating may result in HUD withholding additional grant funds or offset the
Housing Choice Voucher (HCV) administrative fees.
Questioned Cost: None.
(MW) - Material Weakness (SD) - Significant Deficiency (NC) - Noncompliance
-12-
Context: The Housing Authority did not provide required reports.
Statistical Sampling Validity: Not applicable.
Repeat of a Prior-Year Finding: 2020-001, 2019-005, 2018-007
Recommendation: We recommend the City establish policies and procedures that will ensure the
retention of program documents.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The City Controller's Office drafted a grants policy that is currently under
review by City Management. Community development staff will ensure a succession plan is in
place for any staff turnover and for report preparation compliance.
Planned Implementation Date: December 31, 2024
Responsible Person(s): City Manager, Community Development Director, and City Controller
2021-003- Incorrect Payrates {SD)
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Section 8 Housing Choice Vouchers
14.871
U.S. Department of Housing and Urban Development
Not applicable
CA-071 - 2021
Allowable Costs/Cost Principles
Criteria: Title 2, Subtitle A, Chapter II, Part 200, General Provisions for Selected Items of Cost, Section
200.430, Compensation - Personal Services requires that costs of compensation are allowable to the
extent that they satisfy specific requirements which in include that the total compensation of individual
employees is determined and supported as provided in the Standards for Documentation of Personnel
Expenses. The said standards require charges to Federal awards for salaries and wages must be based
on records that must be supported by a system of internal control which provides reasonable assurance
that the charges are accurate, allowable, and properly allocated.
Condition: The City uses personnel action forms (PA 101) to document the approved payrates of City
employees. During our audit, we noted that the payrates used to determine the amounts claimed for
payroll costs associated with the program were lower than what was reflected in the PA 101 form.
Cause: The City approved retroactive pay increases for employees and the pay increases were
processed as lump sum adjustments. The payroll records prior to the approval of the retroactive pay
were not adjusted to reflect the change. The program costs were not adjusted either.
Effect or Potential Effect: The City missed the opportunity to claim higher payroll costs to the program.
Questioned Cost: None.
Context: Six instances of incorrect payrates were found out of 20 sample items. Since the costs claimed
were lower than what they should have been, no questioned cost is reported.
Statistical Sampling Validity: Samples are haphazardly selected.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City improve procedures to ensure that payrate changes are
approved timely and payroll costs charged to the grant are also adjusted whenever payrate changes are
approved.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The general accounting policy will be updated for the accountant to check
the payroll register to accrue retroactive pay changes to the correct period.
Planned Implementation Date: June 30, 2024
Responsible Person(s): City Controller
2021-004- Distribution of Hours Worked (NC}
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Section 8 Housing Choice Vouchers
14.871
U.S. Department of Housing and Urban Development
Not applicable
CA-071 - 2021
Allowable CosUCost Principles
Criteria: Title 2, Subtitle A, Chapter II, Part 200, General Provisions for Selected Items of Cost, Section
200.430, Compensation - Personal Services requires that costs of compensation are allowable to the
extent that they satisfy specific requirements which in include that the total compensation of individual
employees is determined and supported as provided in the Standards for Documentation of Personnel
Expenses. The said standards require charges to Federal awards for salaries and wages must be based
on records that must be supported by a system of internal control which provides reasonable assurance
that the charges are accurate, allowable, and properly allocated.
Federal award recipients should support the distribution of the employee's salary or wages among
specific activities or cost objectives if the employee works on more than one Federal award; a Federal
award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect
activities which are allocated using different allocation bases; or an unallowable activity and a direct or
indirect cost activity.
Condition: If an employee works on more than one program or fund, the employee's salary or wages
and benefits are distributed by the City to the respective programs or funds based on the number of hours
worked. The basis for the distribution is the employee's timecard. During our audit, we noted one
employee's timecard did not indicate the number of hours worked for Section 8 or another program/fund,
however only 10% of his/her payroll cost was charged to Section 8.
Cause: The City was unable to provide the timecard that showed the hours worked by the employee by
program/fund.
Effect or Potential Effect: Over or understatement of payroll cost charged to the program.
Questioned Cost: None.
Context: One exception out of 20 sample items.
Statistical Sampling Validity: Samples are haphazardly selected.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend that the City improve procedures to ensure that they retain all
timecards that reflect the distribution of costs to programs/funds and make them available for the auditors.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The payroll policy will be updated to require that timecards be updated
with supervisor signature if changes are made to change allocation to another fund.
Planned Implementation Date: June 30, 2024
Responsible Person(s): City Controller
2021-005- Housing Quality Standards Inspection {NC)
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Section 8 Housing Choice Vouchers
14.871
U.S. Department of Housing and Urban Development
Not applicable
CA-071 - 2021
Special Tests and Provisions
Criteria: The public housing agency (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.
Condition: In one instance, the City did not perform the required annual inspection.
Cause: We were informed that the HUD system did not release the address for inspection so no
inspection was performed.
Effect or Potential Effect: The City's failure to comply with stated requirements exposes the City to
sanctions from the federal agency, including loss of funding.
Questioned Cost: None
Context: The exception was noted in one out of 60 participants tested. The City has noted that they
will investigate the issue.
Statistical Sampling Validity: Samples are haphazardly selected.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City to improve procedures to ensure that all annual inspections
are performed.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: Policies will be enforced or monitored more closely by Housing Authority
management to ensure all inspections and re-inspections are complete and documented.
Planned Implementation Date: December 31, 2024
Responsible Person(s): Community Development Director
2021-007- Missing Reports (SD, NC)
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Community Development Block GranUEntitlement Grants
14.218
U.S. Department of Housing and Urban Development
No applicable
B-19-MC-06-0515 - 2019
Reporting
Criteria: The Office of Management and Budget 2021 Compliance Supplement states that the following
reports are required to be submitted to the U.S. Department of Housing and Urban Development.
SF-425, Federal Financial Report - Applicable (cash status only) (this is the IDIS C04PR29 Cash on
Hand Quarterly Report made available in IDIS on August 12, 2019, which allows grantees to generate
this report by custom date ranges and export data to Excel and PDF)
Integrated Disbursement and Information System (/DIS) (0MB No. 25060077) - Grantees may include
reports generated by IDIS as part of their annual performance and evaluation report that must be
submitted for the CDBG Entitlement program 90 days after the end of a grantee's program year.
(1) C04PR03 - Activity Summary Report
(2) C04PR26 - CDBG Financial Summary Report
(3) C04PR26 - CDBG-CV Financial Summary Report
(4) C04PR26 - CDBG Activity Summary by Selected Grant
Section 3 of the Housing and Urban Development Act of 1968 - The purpose of Section 3 is to ensure
that employment and other economic opportunities generated by certain HUD financial assistance shall,
to the greatest extent feasible, and consistent with existing federal, state, and local laws and regulations,
be directed to low-and very low-income persons, particularly those who are recipients of government
assistance for housing, and to business concerns which provide economic opportunities to low-and very
low-income persons. Section 3 projects are housing rehabilitation, housing construction, and other public
construction projects assisted under HUD programs that provide housing and community development
financial assistance when the total amount of assistance to the project exceeds a threshold of $200,000.
Consolidated Annual Performance and Evaluation Report (CAPER) (24 CFR 91.520) -- A grantee's
CAPER, submitted through the IDIS e-Con Planning Suite, is due 90 days after the close of a jurisdiction's
program year.
Condition: We were unable to obtain the following reports: SF-425, Section 3 report and CAPER.
Cause: Turnover of staff and lack of internal control over the retention of program reports.
Effect or Potential Effect: The City's failure to comply with stated reporting requirements exposes the
City to sanctions from the federal agency, including loss of funding.
Questioned Cost: None
Context: The City did not provide the abovementioned reports.
Statistical Sampling Validity: Not applicable.
Repeat of a Prior-Year Finding: Yes, 2019-001, 2018-001
Recommendation: We recommend the City establish policies and procedures that will ensure the
retention of program reports.
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The City Controller drafted a grants policy which is currently under review
by the City Manager, that includes succession planning in case of staff turnover and parameters for
grant reporting compliance.
Planned Implementation Date: December 31, 2024
Responsible Person(s): City Manager, Grants Manager
2021-008- Incorrect Payrate and Hours Worked (SD)
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Community Development Block GranUEntitlement Grants
14.218
U.S. Department of Housing and Urban Development
No applicable
B-19-MC-06-0515 - 2019
Allowable CosUCost Principles
Criteria: Title 2, Subtitle A, Chapter II, Part 200, General Provisions for Selected Items of Cost, Section
200.430, Compensation - Personal Services requires that costs of compensation are allowable to the
extent that they satisfy specific requirements which in include that the total compensation of individual
employees is determined and supported as provided in the Standards for Documentation of Personnel
Expenses. The said standards require charges to Federal awards for salaries and wages must be based
on records that must be supported by a system of internal control which provides reasonable assurance
that the charges are accurate, allowable, and properly allocated.
Condition: During our audit, we found one instance where the employee's timecard did not reflect the
number of hours worked for CDBG and another instance where the employee's payrate did not agree to
the payrate stated on the personnel action form (PA 101 ).
Cause: For the exception related to timecard: The City was unable to provide the timecard that showed
the hours worked by the employee by program/fund.
For the exception related to payrate: The City approved retroactive pay increases for employees and the
pay increases were processed as lump sum adjustments. The payroll records prior to the approval of
the retroactive pay were not adjusted to reflect the change. The program costs were not adjusted either.
Effect or Potential Effect: Over or understatement of costs charged to the program.
Questioned Cost: None
Context: One exception related to timecard and another exception related to payrate were found, out
of 20 items selected.
Statistical Sampling Validity: Samples are haphazardly selected.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City improve procedures to ensure completeness and accuracy
of payroll costs charged to federal programs.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The general accounting policy will be updated for the accountant to check
the payroll register to accrue retroactive pay changes to the correct period. The payroll policy will
also be updated to require that timecards be updated with supervisor signature if changes are made
to change allocation to another fund.
Planned Implementation Date: June 30, 2024
Responsible Person(s): City Controller
2021-006- Incorrect Payrates {SD, NC)
Federal Program Title:
Federal Catalog Number:
Federal Agency:
Pass-Through Entity:
Federal Award Number and Year:
Category of Finding:
Coronavirus Relief Fund
21.019
U.S. Department of the Treasury
CA Department of Finance
N/A-2021
Allowable Costs/Cost Principles
Criteria: Title 2, Subtitle A, Chapter II, Part 200, General Provisions for Selected Items of Cost, Section
200.430, Compensation - Personal Services requires that costs of compensation are allowable to the
extent that they satisfy specific requirements which in include that the total compensation of individual
employees is determined and supported as provided in the Standards for Documentation of Personnel
Expenses. The said standards require charges to Federal awards for salaries and wages must be based
on records that must be supported by a system of internal control which provides reasonable assurance
that the charges are accurate, allowable, and properly allocated.
Condition: The City used incorrect payrates when calculating payroll costs charged to the program.
Cause: When the City calculated the Fire Department payroll and payroll costs related to Covid Leave,
they used a report that reflected payrates that were higher than what the payroll register reported.
Effect or Potential Effect: The City overstated the payroll costs charged to the program.
Questioned Cost: $32,314
Context: The exception was found in 10 out of 28 employees selected. The questioned cost is the
amount projected to the entire population.
Statistical Sampling Validity: Samples are haphazardly selected.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City enhance procedures to double check the payrates used
when calculating charges to federal awards.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The City has other eligible costs that were not claimed for this grant that
can be used to offset the questioned cost. Procedures are already in place to enhance payrate
calculations in the future.
Planned Implementation Date: Implemented as of April 2024
Responsible Person(s): City Controller