2023-002 ALN 14.850 - Public & Indian Housing Program - Allowable Activities - Use of Operating Funds for Capital Improvements
Condition and Criteria:
According to the U.S. Department of Housing and Urban Development (HUD) regulations, specifically 24 CFR Part 990, public housing agencies (PHAs) are permitted to use up to 20% of their operating funds for capital improvements. Expenditures more than this threshold must be specifically approved by HUD.
During our audit, it was noted that the PHA utilized $384,080 of its operating funds for capital improvements. This amount represents 28% of the total operating funds received, exceeding the 20% threshold allowed without prior HUD approval.
Amount of Questioned Costs:
The amount of questioned costs is $113,334, which represents an excess of the 20% allowable threshold.
Context:
The Authority received $1,353,732 in Operating funds during the audit period, resulting in a threshold of up to $270,746 to be allowed for the use of capital improvements. $384,080 of the Authority’s operating funds were used for capital improvements, which is in excess of the threshold by $113,334.
Cause:
The cause of this non-compliance was a lack of adequate internal controls from prior management to monitor the percentage of operating funds being allocated for capital improvements. The PHA did not have a system in place to ensure that expenditure for capital improvements did not exceed the allowable 20% threshold.
Effect:
As a result, the PHA was not in compliance with HUD regulations, which may result in questioned costs and the potential for required repayment of the funds used inappropriately.
Auditor’s Recommendation:
We recommend that the PHA implement stronger internal controls to monitor the use of operating funds for capital improvements. Specifically, the PHA should establish procedures to track the percentage of operating funds allocated for capital improvements and ensure compliance with the 20% threshold. Additionally, the PHA should seek retroactive approval from HUD for the excess funds used or take appropriate steps to reclassify or repay the questioned costs.
Grantee Response:
The Executive Director agrees with the finding and will follow the Auditor's recommendation.
2023-003 ALN 14.850 - Public & Indian Housing Program - Eligibility
Condition and Criteria:
During our audit, it was determined that significant deficiencies in internal controls existed over the Authority’s Public & Indian Housing Program eligibility process being compliant with HUD regulatory requirements. EIV reports should be run within 120 days of move-in for new admissions to the program. An EIV report should be run and maintained in the tenant's file at least once annually to meet HUD's documentation requirements. HUD form 9886 needs to be signed annually by the tenants. Rent must be properly calculated or agreed to the Authority's flat rent schedule.
The Authority did not maintain EIV reports in the tenant files. Therefore, no evidence of the EIV report being run exists and support for tenants with Social Security income was insufficient. The Authority's internal controls failed to identify one tenant that did not have an executed HUD form 9886 in the file and one tenant that did not have the correct amount of rent calculated.
Amount of Questioned Costs:
None
Context:
Of the 20 tenant files tested for eligibility, evidence of the EIV report being ran within 120 days of move-in date for the three new admissions tested was not present. In addition, 7 tenant files did not have evidence of an EIV report being ran at least once annually. In addition, one tenant file tested did not have an executed HUD form 9886 in the file. One tenant's flat rent amount was listed as $206, which did not agree to the Authority's flat rent schedule or any possible calculation for rent.
Cause:
The Authority did not utilize adequate internal controls over the Public & Indian Housing program as there is a lack of sufficient documentation. The staff under prior management was under the impression that once the EIV report is run, it should be destroyed and not stored in the file.
Effect:
Adequate supporting documentation was not maintained in the file and income was not adequately supported by the documentation.
Auditor’s Recommendation:
We recommend the Authority implement controls to run the EIV report within 120 days of move-in for new admissions and at least once annually for all other tenants. The Authority needs to maintain these EIV reports in the tenant files. The Authority should utilize effective controls to ensure relevant documentation is maintained in the Public & Indian Housing program tenant files.
Grantee Response:
The Executive Director agrees with the finding and will follow the Auditor's recommendation.
2023-004 ALN 14.871 – Housing Voucher Cluster – Eligibility
Condition and Criteria:
During our audit, it was determined that significant deficiencies in internal controls existed over the Authority’s Housing Voucher Cluster eligibility process being compliant with HUD regulatory requirements. EIV reports should be run within 120 days of move-in for new admissions to the program. An EIV report should be run and maintained in the tenant's file at least once annually to meet HUD's documentation requirements and to evidence support of tenants' social security income.
The Authority did not maintain EIV reports in the tenant files. Therefore, no evidence of the EIV report being run exists and support for tenants with Social Security income was insufficient.
Amount of Questioned Costs:
None
Context:
Of the 20 tenant files tested for eligibility, evidence of the EIV report being ran within 120 days of move-in date for the three new admissions tested was not present. In addition, 14 tenant files did not have evidence of an EIV report being ran at least once annually. In addition, H&P was unable to verify social security income for 5 tenants as there were no EIV reports, or social security letters present in the file.
Cause:
The Authority did not utilize adequate internal controls over the HCV program as there is a lack of sufficient documentation. The staff under prior management was under the impression that once the report is ran, it should be destroyed and not stored in the file.
Effect:
Adequate supporting documentation was not maintained in the file and income was not adequately supported by the documentation.
Auditor’s Recommendation:
We recommend the Authority implement controls to run the EIV report within 120 days of move-in for new admissions and at least once annually for all other tenants. The Authority needs to maintain these EIV reports in the tenant files. The Authority should utilize effective controls to ensure relevant documentation is maintained in the HCV program tenant files.
Grantee Response:
The Executive Director agrees with the finding and will follow the Auditor's recommendation.
2023-005 ALN 14.850 - Public & Indian Housing Program - Procurement
Condition and Criteria:
According to the U.S. Department of Housing and Urban Development (HUD) regulations, specifically 2 CFR Part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards), PHAs are required to establish and maintain written procurement procedures. These procedures must ensure that all procurement transactions are conducted in a manner providing full and open competition, avoiding unnecessary or duplicative purchases, and to ensure that contracts are awarded only to responsible contractors.
During our audit, it was noted that the PHA did not perform any procurement procedures for purchases made with a vendor during the audit period. Purchases totaled $65,706, of which multiple transactions were subject to procurement procedures, such as obtaining the required number of quotes and documenting those procedures. Specifically, the written procurement policies and documentation requirements were not followed.
Amount of Questioned Costs:
None
Context:
There were no procurement procedures performed and no documentation of the necessary number of quotes required for purchases with Whitaker Flooring totaling $65,706 during the year.
Cause:
The cause of this non-compliance was the absence of established internal controls and procedures related to procurement under prior management. The PHA did not have a designated individual or department responsible for overseeing and ensuring compliance with procurement regulations.
Effect:
As a result, the PHA was not in compliance with federal procurement regulations. This lack of procurement procedures increases the risk of fraud, waste, and abuse of federal funds, and it may result in questioned costs and potential disallowances.
Auditor’s Recommendation:
We recommend that the PHA follow their written procurement procedures in accordance with 2 CFR Part 200. These procedures should include guidelines for competitive bidding, contractor selection, contract monitoring, and documentation requirements. The PHA should also provide training to all relevant staff on the procurement procedures and designate a responsible individual or department to oversee procurement activities.
Grantee Response:
The Executive Director agrees with the finding and will follow the Auditor's recommendation.
2023-006 ALN 14.872 - Capital Funds Program - Special Tests - Environmental Reviews
Condition and Criteria:
According to HUD regulations, specifically 24 CFR Part 58, PHAs are required to conduct environmental reviews for projects funded under the Capital Fund Program. These reviews ensure that the projects comply with the National Environmental Policy Act (NEPA) and other related federal environmental laws and authorities. Certain activities may be categorically excluded from NEPA, but documentation supporting these exclusions must be maintained.
During our audit, the PHA was unable to provide the environmental reviews or documentation supporting categorically excluded activities for CFP 501-21 and 501-22 grants during the audit period. There was no evidence that required environmental assessments or justifications for categorical exclusions were completed and retained.
Amount of Questioned Costs:
None
Context:
The Authority was unable to provide the environmental reviews or documentation supporting categorically excluded activities for CFP 501-21 and 501-22 grants during the audit period.
Cause:
The cause of this non-compliance appears to be inadequate oversight and internal controls under prior management regarding the environmental review process. The PHA did not have established procedures to ensure that environmental reviews were conducted and properly documented for all applicable projects.
Effect:
As a result, the PHA was not in compliance with HUD’s environmental review requirements. This non-compliance could result in projects being implemented without proper environmental safeguards, potentially leading to negative environmental impacts and jeopardizing federal funding.
Auditor’s Recommendation:
We recommend that the PHA implement procedures to ensure that all required environmental reviews are conducted and documented in accordance with 24 CFR Part 58. This includes maintaining a record of environmental assessments, justifications for categorical exclusions, and any other related documentation. Additionally, the PHA should provide training for staff responsible for overseeing the environmental review process to ensure compliance with federal requirements.
Grantee Response:
The Executive Director agrees with the finding and will follow the Auditor's recommendation.
2023-002 ALN 14.850 - Public & Indian Housing Program - Allowable Activities - Use of Operating Funds for Capital Improvements
Condition and Criteria:
According to the U.S. Department of Housing and Urban Development (HUD) regulations, specifically 24 CFR Part 990, public housing agencies (PHAs) are permitted to use up to 20% of their operating funds for capital improvements. Expenditures more than this threshold must be specifically approved by HUD.
During our audit, it was noted that the PHA utilized $384,080 of its operating funds for capital improvements. This amount represents 28% of the total operating funds received, exceeding the 20% threshold allowed without prior HUD approval.
Amount of Questioned Costs:
The amount of questioned costs is $113,334, which represents an excess of the 20% allowable threshold.
Context:
The Authority received $1,353,732 in Operating funds during the audit period, resulting in a threshold of up to $270,746 to be allowed for the use of capital improvements. $384,080 of the Authority’s operating funds were used for capital improvements, which is in excess of the threshold by $113,334.
Cause:
The cause of this non-compliance was a lack of adequate internal controls from prior management to monitor the percentage of operating funds being allocated for capital improvements. The PHA did not have a system in place to ensure that expenditure for capital improvements did not exceed the allowable 20% threshold.
Effect:
As a result, the PHA was not in compliance with HUD regulations, which may result in questioned costs and the potential for required repayment of the funds used inappropriately.
Auditor’s Recommendation:
We recommend that the PHA implement stronger internal controls to monitor the use of operating funds for capital improvements. Specifically, the PHA should establish procedures to track the percentage of operating funds allocated for capital improvements and ensure compliance with the 20% threshold. Additionally, the PHA should seek retroactive approval from HUD for the excess funds used or take appropriate steps to reclassify or repay the questioned costs.
Grantee Response:
The Executive Director agrees with the finding and will follow the Auditor's recommendation.
2023-003 ALN 14.850 - Public & Indian Housing Program - Eligibility
Condition and Criteria:
During our audit, it was determined that significant deficiencies in internal controls existed over the Authority’s Public & Indian Housing Program eligibility process being compliant with HUD regulatory requirements. EIV reports should be run within 120 days of move-in for new admissions to the program. An EIV report should be run and maintained in the tenant's file at least once annually to meet HUD's documentation requirements. HUD form 9886 needs to be signed annually by the tenants. Rent must be properly calculated or agreed to the Authority's flat rent schedule.
The Authority did not maintain EIV reports in the tenant files. Therefore, no evidence of the EIV report being run exists and support for tenants with Social Security income was insufficient. The Authority's internal controls failed to identify one tenant that did not have an executed HUD form 9886 in the file and one tenant that did not have the correct amount of rent calculated.
Amount of Questioned Costs:
None
Context:
Of the 20 tenant files tested for eligibility, evidence of the EIV report being ran within 120 days of move-in date for the three new admissions tested was not present. In addition, 7 tenant files did not have evidence of an EIV report being ran at least once annually. In addition, one tenant file tested did not have an executed HUD form 9886 in the file. One tenant's flat rent amount was listed as $206, which did not agree to the Authority's flat rent schedule or any possible calculation for rent.
Cause:
The Authority did not utilize adequate internal controls over the Public & Indian Housing program as there is a lack of sufficient documentation. The staff under prior management was under the impression that once the EIV report is run, it should be destroyed and not stored in the file.
Effect:
Adequate supporting documentation was not maintained in the file and income was not adequately supported by the documentation.
Auditor’s Recommendation:
We recommend the Authority implement controls to run the EIV report within 120 days of move-in for new admissions and at least once annually for all other tenants. The Authority needs to maintain these EIV reports in the tenant files. The Authority should utilize effective controls to ensure relevant documentation is maintained in the Public & Indian Housing program tenant files.
Grantee Response:
The Executive Director agrees with the finding and will follow the Auditor's recommendation.
2023-004 ALN 14.871 – Housing Voucher Cluster – Eligibility
Condition and Criteria:
During our audit, it was determined that significant deficiencies in internal controls existed over the Authority’s Housing Voucher Cluster eligibility process being compliant with HUD regulatory requirements. EIV reports should be run within 120 days of move-in for new admissions to the program. An EIV report should be run and maintained in the tenant's file at least once annually to meet HUD's documentation requirements and to evidence support of tenants' social security income.
The Authority did not maintain EIV reports in the tenant files. Therefore, no evidence of the EIV report being run exists and support for tenants with Social Security income was insufficient.
Amount of Questioned Costs:
None
Context:
Of the 20 tenant files tested for eligibility, evidence of the EIV report being ran within 120 days of move-in date for the three new admissions tested was not present. In addition, 14 tenant files did not have evidence of an EIV report being ran at least once annually. In addition, H&P was unable to verify social security income for 5 tenants as there were no EIV reports, or social security letters present in the file.
Cause:
The Authority did not utilize adequate internal controls over the HCV program as there is a lack of sufficient documentation. The staff under prior management was under the impression that once the report is ran, it should be destroyed and not stored in the file.
Effect:
Adequate supporting documentation was not maintained in the file and income was not adequately supported by the documentation.
Auditor’s Recommendation:
We recommend the Authority implement controls to run the EIV report within 120 days of move-in for new admissions and at least once annually for all other tenants. The Authority needs to maintain these EIV reports in the tenant files. The Authority should utilize effective controls to ensure relevant documentation is maintained in the HCV program tenant files.
Grantee Response:
The Executive Director agrees with the finding and will follow the Auditor's recommendation.
2023-005 ALN 14.850 - Public & Indian Housing Program - Procurement
Condition and Criteria:
According to the U.S. Department of Housing and Urban Development (HUD) regulations, specifically 2 CFR Part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards), PHAs are required to establish and maintain written procurement procedures. These procedures must ensure that all procurement transactions are conducted in a manner providing full and open competition, avoiding unnecessary or duplicative purchases, and to ensure that contracts are awarded only to responsible contractors.
During our audit, it was noted that the PHA did not perform any procurement procedures for purchases made with a vendor during the audit period. Purchases totaled $65,706, of which multiple transactions were subject to procurement procedures, such as obtaining the required number of quotes and documenting those procedures. Specifically, the written procurement policies and documentation requirements were not followed.
Amount of Questioned Costs:
None
Context:
There were no procurement procedures performed and no documentation of the necessary number of quotes required for purchases with Whitaker Flooring totaling $65,706 during the year.
Cause:
The cause of this non-compliance was the absence of established internal controls and procedures related to procurement under prior management. The PHA did not have a designated individual or department responsible for overseeing and ensuring compliance with procurement regulations.
Effect:
As a result, the PHA was not in compliance with federal procurement regulations. This lack of procurement procedures increases the risk of fraud, waste, and abuse of federal funds, and it may result in questioned costs and potential disallowances.
Auditor’s Recommendation:
We recommend that the PHA follow their written procurement procedures in accordance with 2 CFR Part 200. These procedures should include guidelines for competitive bidding, contractor selection, contract monitoring, and documentation requirements. The PHA should also provide training to all relevant staff on the procurement procedures and designate a responsible individual or department to oversee procurement activities.
Grantee Response:
The Executive Director agrees with the finding and will follow the Auditor's recommendation.
2023-006 ALN 14.872 - Capital Funds Program - Special Tests - Environmental Reviews
Condition and Criteria:
According to HUD regulations, specifically 24 CFR Part 58, PHAs are required to conduct environmental reviews for projects funded under the Capital Fund Program. These reviews ensure that the projects comply with the National Environmental Policy Act (NEPA) and other related federal environmental laws and authorities. Certain activities may be categorically excluded from NEPA, but documentation supporting these exclusions must be maintained.
During our audit, the PHA was unable to provide the environmental reviews or documentation supporting categorically excluded activities for CFP 501-21 and 501-22 grants during the audit period. There was no evidence that required environmental assessments or justifications for categorical exclusions were completed and retained.
Amount of Questioned Costs:
None
Context:
The Authority was unable to provide the environmental reviews or documentation supporting categorically excluded activities for CFP 501-21 and 501-22 grants during the audit period.
Cause:
The cause of this non-compliance appears to be inadequate oversight and internal controls under prior management regarding the environmental review process. The PHA did not have established procedures to ensure that environmental reviews were conducted and properly documented for all applicable projects.
Effect:
As a result, the PHA was not in compliance with HUD’s environmental review requirements. This non-compliance could result in projects being implemented without proper environmental safeguards, potentially leading to negative environmental impacts and jeopardizing federal funding.
Auditor’s Recommendation:
We recommend that the PHA implement procedures to ensure that all required environmental reviews are conducted and documented in accordance with 24 CFR Part 58. This includes maintaining a record of environmental assessments, justifications for categorical exclusions, and any other related documentation. Additionally, the PHA should provide training for staff responsible for overseeing the environmental review process to ensure compliance with federal requirements.
Grantee Response:
The Executive Director agrees with the finding and will follow the Auditor's recommendation.