Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI sections 3.2-L-1
and 4-14.218-10 states: "Recipients must use the standard financial reporting forms or such other forms as may be authorized by OMB (approval is indicated by an OMB paperwork control number on the form) when reporting to the Federal awarding agency. Each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the Federal awarding agency."
For CDBG, the City is required to submit the following reports.
* SF-425 - Federal Financial Report
* C04PR03 - Activity Summary Report
* C04PR26 - CDBG Financial Summary
* HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-
Income Persons, (OMB No. 2529-0043)
U.S. Department of Housing and Urban Development (HUD) guidance titled, "Using IDIS to Prepare the
Consolidated Plan, Annual Action Plan, and CAPER/PER," states:
"Within 90 days after the end of its program year, a grantee must submit a Consolidated Annual
Performance and Evaluation Report (CAPER). The primary purpose of the CAPER is to report on progress in meeting one-year goals described in the Annual Action Plan and long-term goals
described in the Consolidated Plan."
Condition: The City was unable to provide the required SF-425 Federal Financial Report. We were
therefore unable to perform testing on report information accuracy.
Cause: Lack of internal control over the preparation, review, and submission of the financial reports.
Effect or Potential Effect: The City's failure to comply with stated rules and regulations over the required
reports increases the risk that inaccurate or incomplete information will be reported.
Questioned Cost: No costs identified
Context: The SF-425 Federal Financial Report was not available for review. Auditor therefore cannot
perform reporting testing on the SF-425 report.
Upon search made in hudexchange.info, the online platform for HUD program information, no CAPER
appears to have been submitted for the 2016 program year (FY 2016-2017). The CAPER was completed
and timely submitted for the 2017 program year (FY 2017-2018).
The City was able to provide the C04PR03 and C04PR26 reports.
Repeat of a Prior-Year Finding: 2017-001, 2016-002, 2015-003, 2014-005
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI section 4-14.218-
9 states:
"The grantee must accurately account for any program income generated from the use of CDBG
funds and must treat such income as additional CDBG funds which are subject to all program
rules.
"Making loans and collecting the payments on those loans can be a significant source of program
income for grantees. The use of program income derived from loan payments is subject to
program requirements. This carries with it the responsibility for grantees to have a loan origination
and servicing system in effect which assures that loans are properly authorized, receivables are
properly established, earned income is properly recorded and used, and write-offs of uncollectible
amounts are properly authorized (24 CFR sections 570.500 and 570.504)."
Condition: The City does not have adequate internal controls to identify and record CDBG program
income on a regular and timely basis. Program income is not being used to pay for allowable costs prior
to drawing down additional funds.
Known program income received in the current year from ten monthly loan repayments totaling $61,844
did not get reported as such. In addition, it is not clear whether or not two months of loan payments
totaling $12,369 were received and not reported.
Cause: Lack of internal controls and adequate staff training on program income identification,
determination, assessment, and recording.
Effect or Potential Effect: The Grants Division is not in compliance with grant requirements, where
drawdowns are being applied against the grant award instead of the required reported program income
first. The lack of internal controls may also result in misstatements due to errors or fraud, which could
ultimately result in misuse of federal funds.
Questioned Cost: $61,844
Context: There has been no accurate and timely process for the City to record program income. Per the
IDIS PR09 report, program income was reported on an annual basis for program years 1997 through
2005. No program income was reported for program years 2008 through 2015. During program year
2016, the grant consultant identified and reported program income received in program years 2011
through 2015. However, not all program year 2016 program income was reported and no 2017 program
income was reported.
Repeat of a Prior-Year Finding: 2017-002
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI section 4-14.218-
9 states:
"The grantee must accurately account for any program income generated from the use of CDBG
funds and must treat such income as additional CDBG funds which are subject to all program
rules.
"Making loans and collecting the payments on those loans can be a significant source of program
income for grantees. The use of program income derived from loan payments is subject to
program requirements. This carries with it the responsibility for grantees to have a loan origination
and servicing system in effect which assures that loans are properly authorized, receivables are
properly established, earned income is properly recorded and used, and write-offs of uncollectible
amounts are properly authorized (24 CFR sections 570.500 and 570.504)."
Condition: The City does not have a complete listing of loans and loan balances subject to repayment.
The City therefore does not have a working schedule that captures a complete listing of expected receipts
that will prompt the recording of program income. In addition, the loan receivable listing does not agree
with the general ledger balance.
Cause: Lack of internal controls, implementation, and adequate staff training on the maintenance of a
complete listing and schedule of issued loans and running loan balances related to CDBG.
Effect or Potential Effect: The Grants Division is not in compliance with grant requirements and grant income has not been properly reported. In addition, there's a possibility that loan payments received may
not be credited to the correct debtor's account or that write-offs are made without proper approval.
Questioned Cost: None
Context: The City appears to have a partial listing of outstanding loans and loan repayment schedules,
however, the repayment schedules have not been updated on a regular and timely basis, loan balances
are not reconciled to the general ledger, and loan repayments are not being reconciled to reported
program income. The completeness of program income cannot be assured as long as the City does not
have a complete tracking of CDBG Section 108 loans and HOME loans outstanding.
The loans receivable general ledger balance does not appear to be updated when payments are
received. The recorded balance at June 30, 2018 is the same as June 30, 2017 and 2016.
Our review indicated that no CDBG program income was reported from FYE 2009 through FYE 2016. In
FYE 2017, program income for FYE 2012 through FYE 2016 was reported as program income along with
some, but not all of the FYE 2017 program income. No CDBG program income was reported in FYE
2018.
Repeat of a Prior-Year Finding: 2017-003
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI, Compliance
Supplement 2017, Part 6 Internal Control section 6-M-1 states:
"The A-102 Common Rule, 0MB Circular A-110 and 2 CFR section 200.303 require that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain
internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award."
Condition: The City did not properly approve payroll timesheets for both CDBG and Section 8 program
administration expenditures.
Cause: Lack of internal controls and adequate staff training over the proper approval process of
electronic timesheets.
Effect or Potential Effect: The City could be charging an inaccurate or unallowable amount of payroll
expenditures to its Federal grants programs, which is a noncompliance for allowable costs.
Questioned Cost: Unknown
Context: We selected a sample of two employees for four pay periods each for CDBG and Section 8 to
test payroll internal controls and compliance. Our review identified 8 out of the 13 timesheets had no
indication of supervisory review and approval, and no further support can be provided to ascertain that
the timesheet is accurate and valid for direct program administration to request for Federal award
reimbursement.
Repeat of a Prior-Year Finding: No
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI, Compliance
Supplement 2017, sections 3.2-B-12 and 3.2-B-14, respectively, state:
"The individual State/local government/Indian tribe departments or agencies (also known as
"operating agencies") are responsible for the performance or administration of Federal awards. In order to receive cost reimbursement under Federal awards, the department or agency usually
submits claims asserting that allowable and eligible costs (direct and indirect) have been incurred in accordance with 2 CFR part 200, subpart E."
"Costs did not consist of improper payments, including (1) payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements" and "costs
were adequately documented."
Condition: The City does not maintain adequate supporting documentation for its IDIS drawdown
requests to explain and support program reimbursement requests. The City does not have a system in
place for the ongoing tracking of drawdowns in line with a regular review and reconciliation of the general
ledger. We noted a difference of $84,286 between City recorded expenditures per the general ledger and
the total drawdowns for the current program year in IDIS. Upon further review, we noted a difference of
$33,086 between the IDIS drawdowns and the total award expenditures per the general ledger that could
not be reconciled. In addition, the City was not able to provide adequate documentation for administrative
costs of $37,727.
Cause: Lack of internal controls over the logging of drawdown records prior to processing the vouchers
for reimbursement in IDIS.
Effect or Potential Effect: The oversight of the drawn voucher in IDIS for Federal grant reimbursement
exposes the City to underlying implications that such transactions may get through without appropriate
review and authorization. This may lead to the posting of unallowed transactions that would be
noncompliant to the program requirements.
Questioned Cost: CDBG Administration drawdown of $70,813.
Context: Upon the review of the current year IDIS drawdowns to the actual award expenditures per the
general ledger, an irreconcilable difference of $33,086 was noted related to administrative costs. Further
review led to a voucher submitted to IDIS for administrative costs that did not get recorded in the City's
internal running log of drawdowns and did not have supporting documentation. A form of support was
provided not in a timely manner, i.e. a month after initial request, indicating a lack of internal controls
over the maintenance and reconciliation of actual IDIS drawdowns and the running drawdown log.
Repeat of a Prior-Year Finding: No
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI, Compliance
Supplement 2017, section 3.2-F-1 states:
"Non-Federal entities other than States must follow 2 CFR sections 200.313(c) through (e) which require that: Property records must be maintained that include a description of the property, a serial number
or other identification number, the source of funding for the property (including the Federal award
identification number), who holds title, the acquisition date, cost of the property, percentage of
Federal participation in the project costs for the Federal award under which the property was
acquired, the location, use and condition of the property, and any ultimate disposition data
including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). A physical inventory of the property must be taken and the results reconciled with the property
records at least once every 2 years (2 CFR section 200.313(d)(2)).
A control system must be developed to ensure adequate safeguards to prevent loss, damage, or
theft of the property. Any loss, damage, or theft must be investigated (2 CFR section
200.313(d)(3)).
Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR section 200.313(d)(4))."
Condition: The City does not maintain property records of all equipment and real property acquired or
improved through Federal funds. The City has not performed a physical inventory of property acquired
with federal funds within the past two years. We were therefore unable to test items from these records
to ascertain that physical inspections of equipment were conducted, equipment is appropriately
safeguarded, property records are maintained, and dispositions were properly handled per Federal
awarding agency disposition instructions.
Cause: Lack of internal controls over recording and maintaining of capital assets.
Effect or Potential Effect: The City is exposed to possible grantor sanctions and inaccuracies in the
maintenance of its capital assets.
Questioned Cost: None
Context: The City was not able to provide evidence of a detailed listing for property records in
relation to equipment purchased with Federal funds. A fire engine was indicated to have been
purchased in the current year in relation to the Public Facilities Improvements Project as noted in
the IDIS CDBG Activity Summary Report. Equipment acquisitions were also reported in prior years.
Repeat of a Prior-Year Finding: 2015-002, 2014-007, 2013-007
Criteria: TITLE 24- HOUSING AND URBAN DEVELOPMENT, PART 5- GENERAL HUD PROGRAM
REQUIREMENTS; WAIVERS, Subpart H- Uniform Financial Reporting Standards, Section 5.801-
Uniform Financial Reporting Standards states:
"(b) Entities (or individuals) to which this subpart is applicable must provide to HUD, on an annual
basis, such financial information as required by HUD."
TITLE 24- HOUSING AND URBAN DEVELOPMENT, PART 982- SECTION 8 TENANT-BASED
ASSISTANCE: HOUSING CHOICE VOUCHER PROGRAM, Subpart D - Annual Contributions Contract
and PHA Administration of Program, Section 982.158- Program Accounts and Records states:
"(a) The PHA must maintain complete and accurate accounts and other records for the program
in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The
records must be in the form required by HUD, including requirements governing computerized or
electronic forms of record-keeping. The PHA must comply with the financial reporting
requirements in 24 CFR part 5, subpart H."
Based on the above compliance requirements and review of the grant requirements, public housing
agencies (PHAs) are required to submit the following reports:
1. HUD-52681-B, Voucher for Payment of Annual Contributions and Operating Statement
2. Financial Reports- Financial Assessment Sub-system, FASS-PH
3. HUD-52648, SEMAP Certification -Addendum for Reporting Data for De-concentration Bonus
Indicator
4. HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-
Income Persons
5. HUD-50058, Family Report
Condition: The Housing Authority did not submit the required annual FASS-PH and 60002 Section 3
Summary reports for FY 2017-2018 to HUD. In addition, an audited FASS-PH has not been submitted to
HUD since FYE 2010 and an unaudited FASS-PH has not been submitted to HUD since FYE 2012.
Cause: Lack of internal control over the preparation and submission of the FASS-PH and 60002 Section
3 reports. The City has not had financial audits completed for fiscal years after June 30, 2014.
Effect or Potential Effect: Failure to comply with the reporting requirements may result in grantor
sanctions, including potential loss of funding.
Questioned Cost: None
Context: The Housing Authority did not submit the required annual FASS-PH and 60002 Section 3
reports to HUD. The City has not filed the FASS-PH report since June 30, 2010.
Repeat of a Prior-Year Finding: 2017-007, 2016-004, 2015-006, 2014-001, 2013-011
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI section 4-14.871-
18 states:
"The annual contributions contract (ACC) establishes the amounts HUD will provide a public
housing agency (PHA) for housing assistance payments (HAP) and administrative fees. HAP may
not be used to cover administrative expenses nor may HAP (including restricted net position
[RNP]) be loaned, advanced, or transferred to other component units or other programs such as
Public and Indian Housing (CFDA 14.850) (24 CFR sections 982.151 and 982.152)."
Condition: We were unable to perform compliance testing due to unavailability of the requested FASSPH
report. We therefore were unable to determine whether transfers and advances of HCVP funds were
properly conducted and whether the Housing Choice Voucher Program's HAP and administrative fee
funding were used appropriately.
Cause: Lack of internal control over the preparation and submission of the FASS-PH report.
Effect or Potential Effect: Use of funds for unallowed costs. The Housing Authority is not in compliance
with grant requirements.
Questioned Costs: $108,104. $77,542 for professional services and $30,562 in HAP administrative fees
over reimbursed to the City. These amounts are based on the OIG audit report dated July 11, 2019.
Context: The Housing Authority did not submit the required annual FASS-PH report to HUD, and we
therefore were unable to perform the required procedures for the operating transfers and administrative
fees compliance component of special tests and provisions of the program.
Repeat of a Prior-Year Finding: 2017-010
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI sections 4-14.871-
16 and 4-14.871-17 states:
"The PHA must inspect the unit leased to a family at least annually to determine if the unit meets
Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The
PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)).
"For units under HAP contract that fail to meet HQS, the PHA must require the owner to correct
any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS
deficiencies within 30 calendar days or within a specified PHA-approved extension. If the owner
does not correct the cited HQS deficiencies within the specified correction period, the PHA must
stop (abate) HAPs beginning no later than the first of the month following the specified correction
period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as
or for tenant damage. For family-caused defects, if the family does not correct the cited HQS
deficiencies within the specified correction period, the PHA must take prompt and vigorous action
to enforce the family obligations (24 CFR sections 982.158(d) and 982.404)."
Condition: Our review identified six (6) re-inspections out of the total sixteen (16) that were performed
were completed after the required 30-day time period. Our review also identified one required inspection
for the year that had not been conducted.
Cause: The HQS re-inspections were not performed in a timely manner due to delays on the abated
status on the property or more focus on other urgent inspections. The high volume of requested
inspections and the shortage of staff during the audit examination period were also factors.
Effect or Potential Effect: Failure to perform re-inspections for HQS deficiencies that were recorded
during the annual inspection may result in grantor sanctions, potentially leading to a loss grant funding.
Questioned Cost: None
Context: Of the sixty (60) participant files reviewed, fifteen (15) required re-inspection. Of those 15, the
City failed to perform re-inspections for six (6) participants within the 30-day time period.
Repeat of a Prior-Year Finding: 2017-008, 2016-005, 2015-007, 2014-002, 2013-012
Criteria: Title 24- Housing and Urban Development, Part 982- Section 8 Tenant-Based Assistance:
Housing Choice Voucher Program, Subpart D - Annual Contributions Contract and PHA Administration
of Program, Section 982.158- Program Accounts and Records states:
"(a) The PHA must maintain complete and accurate accounts and other records for the program
in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The
records must be in the form required by HUD, including requirements governing computerized or
electronic forms of record-keeping. The PHA must comply with the financial reporting
requirements in 24 CFR part 5, subpart H."
Condition: The Housing Authority is required to properly account for program activity. We were unable
to obtain the housing assistance payments (HAP) equity account roll-forward for the year ended June
30, 2018.
Cause: Lack of internal control over the monitoring HAP equity account.
Effect or Potential Effect: The Housing Authority is not in compliance with grant requirements.
Questioned Cost: Unknown. The questioned costs cannot be calculated, because the total additional
funding received by the Housing Authority is unknown.
Context: We were unable to obtain the HAP equity account balance at June 30, 2018.
Repeat of a Prior-Year Finding: 2017-009, 2016-006, 2015-008, 2014-003, 2013-013
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI sections 3.2-L-1
and 4-14.218-10 states: "Recipients must use the standard financial reporting forms or such other forms as may be authorized by OMB (approval is indicated by an OMB paperwork control number on the form) when reporting to the Federal awarding agency. Each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the Federal awarding agency."
For CDBG, the City is required to submit the following reports.
* SF-425 - Federal Financial Report
* C04PR03 - Activity Summary Report
* C04PR26 - CDBG Financial Summary
* HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-
Income Persons, (OMB No. 2529-0043)
U.S. Department of Housing and Urban Development (HUD) guidance titled, "Using IDIS to Prepare the
Consolidated Plan, Annual Action Plan, and CAPER/PER," states:
"Within 90 days after the end of its program year, a grantee must submit a Consolidated Annual
Performance and Evaluation Report (CAPER). The primary purpose of the CAPER is to report on progress in meeting one-year goals described in the Annual Action Plan and long-term goals
described in the Consolidated Plan."
Condition: The City was unable to provide the required SF-425 Federal Financial Report. We were
therefore unable to perform testing on report information accuracy.
Cause: Lack of internal control over the preparation, review, and submission of the financial reports.
Effect or Potential Effect: The City's failure to comply with stated rules and regulations over the required
reports increases the risk that inaccurate or incomplete information will be reported.
Questioned Cost: No costs identified
Context: The SF-425 Federal Financial Report was not available for review. Auditor therefore cannot
perform reporting testing on the SF-425 report.
Upon search made in hudexchange.info, the online platform for HUD program information, no CAPER
appears to have been submitted for the 2016 program year (FY 2016-2017). The CAPER was completed
and timely submitted for the 2017 program year (FY 2017-2018).
The City was able to provide the C04PR03 and C04PR26 reports.
Repeat of a Prior-Year Finding: 2017-001, 2016-002, 2015-003, 2014-005
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI section 4-14.218-
9 states:
"The grantee must accurately account for any program income generated from the use of CDBG
funds and must treat such income as additional CDBG funds which are subject to all program
rules.
"Making loans and collecting the payments on those loans can be a significant source of program
income for grantees. The use of program income derived from loan payments is subject to
program requirements. This carries with it the responsibility for grantees to have a loan origination
and servicing system in effect which assures that loans are properly authorized, receivables are
properly established, earned income is properly recorded and used, and write-offs of uncollectible
amounts are properly authorized (24 CFR sections 570.500 and 570.504)."
Condition: The City does not have adequate internal controls to identify and record CDBG program
income on a regular and timely basis. Program income is not being used to pay for allowable costs prior
to drawing down additional funds.
Known program income received in the current year from ten monthly loan repayments totaling $61,844
did not get reported as such. In addition, it is not clear whether or not two months of loan payments
totaling $12,369 were received and not reported.
Cause: Lack of internal controls and adequate staff training on program income identification,
determination, assessment, and recording.
Effect or Potential Effect: The Grants Division is not in compliance with grant requirements, where
drawdowns are being applied against the grant award instead of the required reported program income
first. The lack of internal controls may also result in misstatements due to errors or fraud, which could
ultimately result in misuse of federal funds.
Questioned Cost: $61,844
Context: There has been no accurate and timely process for the City to record program income. Per the
IDIS PR09 report, program income was reported on an annual basis for program years 1997 through
2005. No program income was reported for program years 2008 through 2015. During program year
2016, the grant consultant identified and reported program income received in program years 2011
through 2015. However, not all program year 2016 program income was reported and no 2017 program
income was reported.
Repeat of a Prior-Year Finding: 2017-002
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI section 4-14.218-
9 states:
"The grantee must accurately account for any program income generated from the use of CDBG
funds and must treat such income as additional CDBG funds which are subject to all program
rules.
"Making loans and collecting the payments on those loans can be a significant source of program
income for grantees. The use of program income derived from loan payments is subject to
program requirements. This carries with it the responsibility for grantees to have a loan origination
and servicing system in effect which assures that loans are properly authorized, receivables are
properly established, earned income is properly recorded and used, and write-offs of uncollectible
amounts are properly authorized (24 CFR sections 570.500 and 570.504)."
Condition: The City does not have a complete listing of loans and loan balances subject to repayment.
The City therefore does not have a working schedule that captures a complete listing of expected receipts
that will prompt the recording of program income. In addition, the loan receivable listing does not agree
with the general ledger balance.
Cause: Lack of internal controls, implementation, and adequate staff training on the maintenance of a
complete listing and schedule of issued loans and running loan balances related to CDBG.
Effect or Potential Effect: The Grants Division is not in compliance with grant requirements and grant income has not been properly reported. In addition, there's a possibility that loan payments received may
not be credited to the correct debtor's account or that write-offs are made without proper approval.
Questioned Cost: None
Context: The City appears to have a partial listing of outstanding loans and loan repayment schedules,
however, the repayment schedules have not been updated on a regular and timely basis, loan balances
are not reconciled to the general ledger, and loan repayments are not being reconciled to reported
program income. The completeness of program income cannot be assured as long as the City does not
have a complete tracking of CDBG Section 108 loans and HOME loans outstanding.
The loans receivable general ledger balance does not appear to be updated when payments are
received. The recorded balance at June 30, 2018 is the same as June 30, 2017 and 2016.
Our review indicated that no CDBG program income was reported from FYE 2009 through FYE 2016. In
FYE 2017, program income for FYE 2012 through FYE 2016 was reported as program income along with
some, but not all of the FYE 2017 program income. No CDBG program income was reported in FYE
2018.
Repeat of a Prior-Year Finding: 2017-003
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI, Compliance
Supplement 2017, Part 6 Internal Control section 6-M-1 states:
"The A-102 Common Rule, 0MB Circular A-110 and 2 CFR section 200.303 require that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain
internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award."
Condition: The City did not properly approve payroll timesheets for both CDBG and Section 8 program
administration expenditures.
Cause: Lack of internal controls and adequate staff training over the proper approval process of
electronic timesheets.
Effect or Potential Effect: The City could be charging an inaccurate or unallowable amount of payroll
expenditures to its Federal grants programs, which is a noncompliance for allowable costs.
Questioned Cost: Unknown
Context: We selected a sample of two employees for four pay periods each for CDBG and Section 8 to
test payroll internal controls and compliance. Our review identified 8 out of the 13 timesheets had no
indication of supervisory review and approval, and no further support can be provided to ascertain that
the timesheet is accurate and valid for direct program administration to request for Federal award
reimbursement.
Repeat of a Prior-Year Finding: No
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI, Compliance
Supplement 2017, sections 3.2-B-12 and 3.2-B-14, respectively, state:
"The individual State/local government/Indian tribe departments or agencies (also known as
"operating agencies") are responsible for the performance or administration of Federal awards. In order to receive cost reimbursement under Federal awards, the department or agency usually
submits claims asserting that allowable and eligible costs (direct and indirect) have been incurred in accordance with 2 CFR part 200, subpart E."
"Costs did not consist of improper payments, including (1) payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements" and "costs
were adequately documented."
Condition: The City does not maintain adequate supporting documentation for its IDIS drawdown
requests to explain and support program reimbursement requests. The City does not have a system in
place for the ongoing tracking of drawdowns in line with a regular review and reconciliation of the general
ledger. We noted a difference of $84,286 between City recorded expenditures per the general ledger and
the total drawdowns for the current program year in IDIS. Upon further review, we noted a difference of
$33,086 between the IDIS drawdowns and the total award expenditures per the general ledger that could
not be reconciled. In addition, the City was not able to provide adequate documentation for administrative
costs of $37,727.
Cause: Lack of internal controls over the logging of drawdown records prior to processing the vouchers
for reimbursement in IDIS.
Effect or Potential Effect: The oversight of the drawn voucher in IDIS for Federal grant reimbursement
exposes the City to underlying implications that such transactions may get through without appropriate
review and authorization. This may lead to the posting of unallowed transactions that would be
noncompliant to the program requirements.
Questioned Cost: CDBG Administration drawdown of $70,813.
Context: Upon the review of the current year IDIS drawdowns to the actual award expenditures per the
general ledger, an irreconcilable difference of $33,086 was noted related to administrative costs. Further
review led to a voucher submitted to IDIS for administrative costs that did not get recorded in the City's
internal running log of drawdowns and did not have supporting documentation. A form of support was
provided not in a timely manner, i.e. a month after initial request, indicating a lack of internal controls
over the maintenance and reconciliation of actual IDIS drawdowns and the running drawdown log.
Repeat of a Prior-Year Finding: No
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI, Compliance
Supplement 2017, section 3.2-F-1 states:
"Non-Federal entities other than States must follow 2 CFR sections 200.313(c) through (e) which require that: Property records must be maintained that include a description of the property, a serial number
or other identification number, the source of funding for the property (including the Federal award
identification number), who holds title, the acquisition date, cost of the property, percentage of
Federal participation in the project costs for the Federal award under which the property was
acquired, the location, use and condition of the property, and any ultimate disposition data
including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). A physical inventory of the property must be taken and the results reconciled with the property
records at least once every 2 years (2 CFR section 200.313(d)(2)).
A control system must be developed to ensure adequate safeguards to prevent loss, damage, or
theft of the property. Any loss, damage, or theft must be investigated (2 CFR section
200.313(d)(3)).
Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR section 200.313(d)(4))."
Condition: The City does not maintain property records of all equipment and real property acquired or
improved through Federal funds. The City has not performed a physical inventory of property acquired
with federal funds within the past two years. We were therefore unable to test items from these records
to ascertain that physical inspections of equipment were conducted, equipment is appropriately
safeguarded, property records are maintained, and dispositions were properly handled per Federal
awarding agency disposition instructions.
Cause: Lack of internal controls over recording and maintaining of capital assets.
Effect or Potential Effect: The City is exposed to possible grantor sanctions and inaccuracies in the
maintenance of its capital assets.
Questioned Cost: None
Context: The City was not able to provide evidence of a detailed listing for property records in
relation to equipment purchased with Federal funds. A fire engine was indicated to have been
purchased in the current year in relation to the Public Facilities Improvements Project as noted in
the IDIS CDBG Activity Summary Report. Equipment acquisitions were also reported in prior years.
Repeat of a Prior-Year Finding: 2015-002, 2014-007, 2013-007
Criteria: TITLE 24- HOUSING AND URBAN DEVELOPMENT, PART 5- GENERAL HUD PROGRAM
REQUIREMENTS; WAIVERS, Subpart H- Uniform Financial Reporting Standards, Section 5.801-
Uniform Financial Reporting Standards states:
"(b) Entities (or individuals) to which this subpart is applicable must provide to HUD, on an annual
basis, such financial information as required by HUD."
TITLE 24- HOUSING AND URBAN DEVELOPMENT, PART 982- SECTION 8 TENANT-BASED
ASSISTANCE: HOUSING CHOICE VOUCHER PROGRAM, Subpart D - Annual Contributions Contract
and PHA Administration of Program, Section 982.158- Program Accounts and Records states:
"(a) The PHA must maintain complete and accurate accounts and other records for the program
in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The
records must be in the form required by HUD, including requirements governing computerized or
electronic forms of record-keeping. The PHA must comply with the financial reporting
requirements in 24 CFR part 5, subpart H."
Based on the above compliance requirements and review of the grant requirements, public housing
agencies (PHAs) are required to submit the following reports:
1. HUD-52681-B, Voucher for Payment of Annual Contributions and Operating Statement
2. Financial Reports- Financial Assessment Sub-system, FASS-PH
3. HUD-52648, SEMAP Certification -Addendum for Reporting Data for De-concentration Bonus
Indicator
4. HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-
Income Persons
5. HUD-50058, Family Report
Condition: The Housing Authority did not submit the required annual FASS-PH and 60002 Section 3
Summary reports for FY 2017-2018 to HUD. In addition, an audited FASS-PH has not been submitted to
HUD since FYE 2010 and an unaudited FASS-PH has not been submitted to HUD since FYE 2012.
Cause: Lack of internal control over the preparation and submission of the FASS-PH and 60002 Section
3 reports. The City has not had financial audits completed for fiscal years after June 30, 2014.
Effect or Potential Effect: Failure to comply with the reporting requirements may result in grantor
sanctions, including potential loss of funding.
Questioned Cost: None
Context: The Housing Authority did not submit the required annual FASS-PH and 60002 Section 3
reports to HUD. The City has not filed the FASS-PH report since June 30, 2010.
Repeat of a Prior-Year Finding: 2017-007, 2016-004, 2015-006, 2014-001, 2013-011
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI section 4-14.871-
18 states:
"The annual contributions contract (ACC) establishes the amounts HUD will provide a public
housing agency (PHA) for housing assistance payments (HAP) and administrative fees. HAP may
not be used to cover administrative expenses nor may HAP (including restricted net position
[RNP]) be loaned, advanced, or transferred to other component units or other programs such as
Public and Indian Housing (CFDA 14.850) (24 CFR sections 982.151 and 982.152)."
Condition: We were unable to perform compliance testing due to unavailability of the requested FASSPH
report. We therefore were unable to determine whether transfers and advances of HCVP funds were
properly conducted and whether the Housing Choice Voucher Program's HAP and administrative fee
funding were used appropriately.
Cause: Lack of internal control over the preparation and submission of the FASS-PH report.
Effect or Potential Effect: Use of funds for unallowed costs. The Housing Authority is not in compliance
with grant requirements.
Questioned Costs: $108,104. $77,542 for professional services and $30,562 in HAP administrative fees
over reimbursed to the City. These amounts are based on the OIG audit report dated July 11, 2019.
Context: The Housing Authority did not submit the required annual FASS-PH report to HUD, and we
therefore were unable to perform the required procedures for the operating transfers and administrative
fees compliance component of special tests and provisions of the program.
Repeat of a Prior-Year Finding: 2017-010
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI sections 4-14.871-
16 and 4-14.871-17 states:
"The PHA must inspect the unit leased to a family at least annually to determine if the unit meets
Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The
PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)).
"For units under HAP contract that fail to meet HQS, the PHA must require the owner to correct
any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS
deficiencies within 30 calendar days or within a specified PHA-approved extension. If the owner
does not correct the cited HQS deficiencies within the specified correction period, the PHA must
stop (abate) HAPs beginning no later than the first of the month following the specified correction
period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as
or for tenant damage. For family-caused defects, if the family does not correct the cited HQS
deficiencies within the specified correction period, the PHA must take prompt and vigorous action
to enforce the family obligations (24 CFR sections 982.158(d) and 982.404)."
Condition: Our review identified six (6) re-inspections out of the total sixteen (16) that were performed
were completed after the required 30-day time period. Our review also identified one required inspection
for the year that had not been conducted.
Cause: The HQS re-inspections were not performed in a timely manner due to delays on the abated
status on the property or more focus on other urgent inspections. The high volume of requested
inspections and the shortage of staff during the audit examination period were also factors.
Effect or Potential Effect: Failure to perform re-inspections for HQS deficiencies that were recorded
during the annual inspection may result in grantor sanctions, potentially leading to a loss grant funding.
Questioned Cost: None
Context: Of the sixty (60) participant files reviewed, fifteen (15) required re-inspection. Of those 15, the
City failed to perform re-inspections for six (6) participants within the 30-day time period.
Repeat of a Prior-Year Finding: 2017-008, 2016-005, 2015-007, 2014-002, 2013-012
Criteria: Title 24- Housing and Urban Development, Part 982- Section 8 Tenant-Based Assistance:
Housing Choice Voucher Program, Subpart D - Annual Contributions Contract and PHA Administration
of Program, Section 982.158- Program Accounts and Records states:
"(a) The PHA must maintain complete and accurate accounts and other records for the program
in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The
records must be in the form required by HUD, including requirements governing computerized or
electronic forms of record-keeping. The PHA must comply with the financial reporting
requirements in 24 CFR part 5, subpart H."
Condition: The Housing Authority is required to properly account for program activity. We were unable
to obtain the housing assistance payments (HAP) equity account roll-forward for the year ended June
30, 2018.
Cause: Lack of internal control over the monitoring HAP equity account.
Effect or Potential Effect: The Housing Authority is not in compliance with grant requirements.
Questioned Cost: Unknown. The questioned costs cannot be calculated, because the total additional
funding received by the Housing Authority is unknown.
Context: We were unable to obtain the HAP equity account balance at June 30, 2018.
Repeat of a Prior-Year Finding: 2017-009, 2016-006, 2015-008, 2014-003, 2013-013