Audit Finding 2023-001 – Lack of Segregation of Duties
Criteria:
Internal control is a process, affected by the North Central Housing Authority's (the Authority) board of commissioners, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. A good system of internal control provides for an adequate segregation of duties so that no one individual handles a transaction from its inception to completion.
Condition:
Due to the limited employees and resources available to the Authority, many aspects of the internal control structure that rely on segregation of duties are missing. Specific accounting processes noted that are affected by the lack of segregation of duties include cash disbursements, payroll disbursements, cash receipting, and specific reporting functions required for the Authority.
Cause:
Due to the limited number of personnel within the Authority, segregation of the accounting functions necessary to ensure adequate internal accounting control is not possible. This is not unusual in operations the size of the Authority; however, management should constantly be aware of this condition and realize that the concentration of duties and responsibilities in a limited number of individuals is not desirable from an accounting point of view.
Effect:
Inadequate segregation of duties could adversely affect the Authority’s ability to detect misstatements in amounts that would be material in relation to the financial statements in a timely period by personnel in the normal course of performing their assigned functions.
Recommendation:
We recommend that the Authority’s board of commissioners and management be aware of the lack of segregation of the accounting functions and, where possible, implement oversight procedures to ensure the internal control policies and procedures are being implemented by personnel to the extent possible.
View of Responsible Officials:
Management agrees with the finding.
Audit Finding 2023-002 – Housing Choice Voucher Budget
Criteria:
HUD standard 982.157(a) requires that each PHA fiscal year, the PHA must submit its proposed budget for the program to HUD for approval at such time and in such form required by HUD.
Condition:
The Housing Choice Voucher program was not in compliance with HUD regulations.
Cause:
The Authority was not aware they needed to produce a budget for the Housing Choice Voucher program.
Effect:
We noted the Authority did not prepare a budget for the current year and was not in compliance with HUD regulations.
Recommendation:
We recommend that the Authority’s board of commissioners and management be aware of the budget requirement and prepare a budget every year.
View of Responsible Officials:
Management agrees with the finding.
Audit Finding 2023-004 – Special Tests and Provisions: HQS Enforcement
Criteria:
For units under HAP contract that fail to meet Housing Quality Standards (HQS), the Authority 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 Authority approved extension. (24 CFR § 982.158(d) and 982.404)
Condition:
The Authority was unable to provide a listing of units with failed HQS inspections and documentation showing the units were reinspected within the proper time frame.
Cause:
The current record keeping of units that do not meet HQS requirements and the subsequent documentation of corrections to these deficiencies is inadequate.
Effect:
We are unable to determine if the Authority is properly documenting failed HQS inspections and following up on the deficiencies.
Recommendation:
We would recommend the Authority keeps documentation of units that do not meet the HQS requirements and the subsequent documentation showing that the deficiencies were attended to within the specified time requirements stated.
Views of Responsible Official:
Management agrees with the finding.
Audit Finding 2023-005 – Special Tests and Provisions: Utility Allowance Schedule
Criteria:
The Authority must maintain an up-to-date utility allowance schedule. The Authority must review utility rate data for each utility category each year and must adjust its utility allowance schedule if there has been a rate change of 10 percent or more for a utility category or fuel type since the last time the utility allowance schedule was revised (24 CFR § 982.517).
Condition:
The Authority was unable to provide proper documentation to support their changes to the Authority’s utility allowance schedules.
Cause:
The current record keeping, and documentation of utility allowance schedules is inadequate.
Effect:
We are unable to determine if the Authority is properly calculating its utility allowance schedules.
Recommendation:
We would recommend the Authority keeps proper documentation of its adjustments to their utility allowance schedules.
Views of Responsible Official:
Management agrees with the finding.
Audit Finding 2023-006 – Depository Agreements
Criteria:
Code of Federal Regulations § 982.156 requires depository agreements to be deposited with a financial institution selected as depositary by the PHA in accordance with HUD requirements.
Condition:
During the audit we noted the Authority did not have depository agreements with the banks.
Cause:
The Authority did not have all the necessary forms for single audit compliance.
Effect:
The Authority is not in compliance with Federal Award Programs.
Recommendation:
We would recommend the Authority completes the necessary forms with the bank to ensure compliance.
Views of Responsible Official:
Management agrees with the finding.
Audit Finding 2023-007 – Federal Audit Clearinghouse Submission
Criteria:
2 CFR §200.512 of the Uniform Guidance requires an entity expending more than $750,000 of federal funds in a fiscal year to submit a data collection form by a due date that is the earlier of 30 calendar day after receipt of the auditor’s report(s) or nine months after the end of the audit period.
Condition:
The Authority’s June 30, 2023 audited financial statements were not filed within the Federal Audit Clearinghouse submission within 9 months of the Authority’s year-end.
Cause:
The Authority had prior difficulties in getting their 2022 audit completed. As a result, the 2023 audit was not able to start on time and was not able to be completed before the reporting deadline.
Effect:
The Authority is not in compliance with Uniform Guidance requirements.
Recommendation:
We recommend the Authority become familiar with reporting requirements for each award and implement procedures to begin audit preparation work earlier in the fiscal year to ensure reports are filed within the nine-month reporting deadline set forth by Uniform Guidance.
Views of Responsible Official:
Management agrees with the finding.
Audit Finding 2023-001 – Lack of Segregation of Duties
Criteria:
Internal control is a process, affected by the North Central Housing Authority's (the Authority) board of commissioners, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. A good system of internal control provides for an adequate segregation of duties so that no one individual handles a transaction from its inception to completion.
Condition:
Due to the limited employees and resources available to the Authority, many aspects of the internal control structure that rely on segregation of duties are missing. Specific accounting processes noted that are affected by the lack of segregation of duties include cash disbursements, payroll disbursements, cash receipting, and specific reporting functions required for the Authority.
Cause:
Due to the limited number of personnel within the Authority, segregation of the accounting functions necessary to ensure adequate internal accounting control is not possible. This is not unusual in operations the size of the Authority; however, management should constantly be aware of this condition and realize that the concentration of duties and responsibilities in a limited number of individuals is not desirable from an accounting point of view.
Effect:
Inadequate segregation of duties could adversely affect the Authority’s ability to detect misstatements in amounts that would be material in relation to the financial statements in a timely period by personnel in the normal course of performing their assigned functions.
Recommendation:
We recommend that the Authority’s board of commissioners and management be aware of the lack of segregation of the accounting functions and, where possible, implement oversight procedures to ensure the internal control policies and procedures are being implemented by personnel to the extent possible.
View of Responsible Officials:
Management agrees with the finding.
Audit Finding 2023-002 – Housing Choice Voucher Budget
Criteria:
HUD standard 982.157(a) requires that each PHA fiscal year, the PHA must submit its proposed budget for the program to HUD for approval at such time and in such form required by HUD.
Condition:
The Housing Choice Voucher program was not in compliance with HUD regulations.
Cause:
The Authority was not aware they needed to produce a budget for the Housing Choice Voucher program.
Effect:
We noted the Authority did not prepare a budget for the current year and was not in compliance with HUD regulations.
Recommendation:
We recommend that the Authority’s board of commissioners and management be aware of the budget requirement and prepare a budget every year.
View of Responsible Officials:
Management agrees with the finding.
Audit Finding 2023-004 – Special Tests and Provisions: HQS Enforcement
Criteria:
For units under HAP contract that fail to meet Housing Quality Standards (HQS), the Authority 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 Authority approved extension. (24 CFR § 982.158(d) and 982.404)
Condition:
The Authority was unable to provide a listing of units with failed HQS inspections and documentation showing the units were reinspected within the proper time frame.
Cause:
The current record keeping of units that do not meet HQS requirements and the subsequent documentation of corrections to these deficiencies is inadequate.
Effect:
We are unable to determine if the Authority is properly documenting failed HQS inspections and following up on the deficiencies.
Recommendation:
We would recommend the Authority keeps documentation of units that do not meet the HQS requirements and the subsequent documentation showing that the deficiencies were attended to within the specified time requirements stated.
Views of Responsible Official:
Management agrees with the finding.
Audit Finding 2023-005 – Special Tests and Provisions: Utility Allowance Schedule
Criteria:
The Authority must maintain an up-to-date utility allowance schedule. The Authority must review utility rate data for each utility category each year and must adjust its utility allowance schedule if there has been a rate change of 10 percent or more for a utility category or fuel type since the last time the utility allowance schedule was revised (24 CFR § 982.517).
Condition:
The Authority was unable to provide proper documentation to support their changes to the Authority’s utility allowance schedules.
Cause:
The current record keeping, and documentation of utility allowance schedules is inadequate.
Effect:
We are unable to determine if the Authority is properly calculating its utility allowance schedules.
Recommendation:
We would recommend the Authority keeps proper documentation of its adjustments to their utility allowance schedules.
Views of Responsible Official:
Management agrees with the finding.
Audit Finding 2023-006 – Depository Agreements
Criteria:
Code of Federal Regulations § 982.156 requires depository agreements to be deposited with a financial institution selected as depositary by the PHA in accordance with HUD requirements.
Condition:
During the audit we noted the Authority did not have depository agreements with the banks.
Cause:
The Authority did not have all the necessary forms for single audit compliance.
Effect:
The Authority is not in compliance with Federal Award Programs.
Recommendation:
We would recommend the Authority completes the necessary forms with the bank to ensure compliance.
Views of Responsible Official:
Management agrees with the finding.
Audit Finding 2023-007 – Federal Audit Clearinghouse Submission
Criteria:
2 CFR §200.512 of the Uniform Guidance requires an entity expending more than $750,000 of federal funds in a fiscal year to submit a data collection form by a due date that is the earlier of 30 calendar day after receipt of the auditor’s report(s) or nine months after the end of the audit period.
Condition:
The Authority’s June 30, 2023 audited financial statements were not filed within the Federal Audit Clearinghouse submission within 9 months of the Authority’s year-end.
Cause:
The Authority had prior difficulties in getting their 2022 audit completed. As a result, the 2023 audit was not able to start on time and was not able to be completed before the reporting deadline.
Effect:
The Authority is not in compliance with Uniform Guidance requirements.
Recommendation:
We recommend the Authority become familiar with reporting requirements for each award and implement procedures to begin audit preparation work earlier in the fiscal year to ensure reports are filed within the nine-month reporting deadline set forth by Uniform Guidance.
Views of Responsible Official:
Management agrees with the finding.