Non-Material Non‐Compliance
Significant Deficiency, Special Tests and Provisions
Criteria: In accordance with 24 CFR section 58.22, CDBG funds (and local funds to be
reimbursed with CDBG funds) cannot be obligated or expended before receipt of HUD’s approval
of a Request for Release of Funds (RROF) and environmental certification except for exempt
activities under 24 CFR section 58.34 and categorically excluded activities under section 58.35 (b).
Condition: The City did not follow procedures to ensure the proper HUD approval of a Request for
Release of Funds was obtained.
Context: Of the CDBG expenditures during the fiscal year, there was 1 project that required
HUD’s approval of the RROF and environmental certification. We noted that proper environmental
certification was obtained, however the RROF was not. Upon further review, the project was
deemed eligible for reimbursement.
Effect: CDBG project might not be eligible to receive reimbursement for expenditures.
Cause: Lack of proper internal control over HUD approvals.
Questioned Cost: This resulted in no questioned costs.
Recommendation: Management should implement controls to ensure that HUD approvals are
obtained timely.
Views of Responsible Officials and Planned Corrective Actions: The City agrees with this
finding. Please refer to the Corrective Action Plan section of this report.
Material Weakness, Eligibility
Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal
control procedures in place to ensure that applicants have all required documentation in their file. In
accordance with 24 CFR Part 5 Subpart F, the City must maintain documentation to support tenant
eligibility.
Condition: The City did not follow procedures to ensure the proper eligibility determination were
made and documented.
Context: Of the 180 applicants during the current year valued at $495,432, we examined 36
(valued at $99,685) and determined that 2 (6%) applicants did not have properly calculated
resources. Upon further review and recalculation, the two applicants were deemed eligible.
Effect: Participants could receive benefits for which they are not eligible.
Cause: Weakness in implementation of controls over eligibility procedures.
Questioned Cost: None. This finding represents an internal control issue; therefore, questioned
costs are not applicable.
Recommendation: Tenant files should be reviewed to verify that calculations are accurate, and all
required documentation has been obtained before approving benefits.
Views of Responsible Officials and Planned Corrective Actions: The City agrees with this
finding. Please refer to the Corrective Action Plan section of this report.
201
Non-Material Non‐Compliance
Significant Deficiency, Special Tests and Provisions
Criteria: In accordance with 24 CFR 964.150, when tenant participation funds are provided to a
Public Housing Authority (PHA), the PHA must provide those funds to duly elected resident
councils. Funding provided by a PHA to a duly elected resident council may be made only under a
written agreement between the PHA and the resident council that includes a resident council
budget. The agreement must require the local resident councils to account to the PHA for the use of
the funds and permit the PHA to inspect and audit the resident council’s financial records related to
the agreement.
Condition: The City did not follow procedures to ensure compliance of tenant participation fund
requirements.
Context: The tenant participation fund agreement was not current and expired in 2018. We
sampled 7 expenditure and supporting documentation reported to the PHA to determine if resident
council expenditure is consistent with the resident council budget. We noted that 4 (58%)
expenditures had proper supporting documentations but were not listed in the resident council
budget.
Effect: Expenditure made that are not consistent with the resident council budget.
Cause: Lack of proper internal control over tenant participation funds.
Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned
costs when likely questioned costs are greater than $25,000. Likely questioned costs do not exceed
$25,000.
Recommendation: Management should obtain a current agreement and implement controls to
ensure that tenant participation funds are in place and properly accounted for.
Views of Responsible Officials and Planned Corrective Actions: The City agrees with this
finding. Please refer to the Corrective Action Plan section of this report.
Material Non‐Compliance
Material Weakness, Special Tests and Provisions
Criteria: In accordance with 24 CFR sections 982.158(d) and 982.404, units under housing
assistance payment (HAP) contract that fail to meet Housing Quality Standards (HQS), the Public
Housing Authority (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 HAPs beginning no later
than the first of the month following the specified correction period or must terminate the HAP
contract.
Condition: The City did not follow procedures to ensure that the HQS were corrected or
subsequent procedures to stop HAP were not enforced.
Context: Of the 130 failed inspections during the current year, we examined 26 and determined
that 22 (85% valued at $110,332) failed inspections were not corrected or the HAP were not
stopped timely.
Effect: Owner could receive benefits for which they are not eligible.
Cause: Lack of proper internal control over HQS enforcement.
Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned
costs when likely questioned costs are greater than $25,000. The sample results identified $110,332
in known questioned costs.
Recommendation: Management should implement controls to ensure that HQS enforcement
procedures are followed timely.
Views of Responsible Officials and Planned Corrective Actions: The City agrees with this
finding. Please refer to the Corrective Action Plan section of this report.
Non-Material Non‐Compliance
Significant Deficiency, Special Tests and Provisions
Criteria: In accordance with 24 CFR section 58.22, CDBG funds (and local funds to be
reimbursed with CDBG funds) cannot be obligated or expended before receipt of HUD’s approval
of a Request for Release of Funds (RROF) and environmental certification except for exempt
activities under 24 CFR section 58.34 and categorically excluded activities under section 58.35 (b).
Condition: The City did not follow procedures to ensure the proper HUD approval of a Request for
Release of Funds was obtained.
Context: Of the CDBG expenditures during the fiscal year, there was 1 project that required
HUD’s approval of the RROF and environmental certification. We noted that proper environmental
certification was obtained, however the RROF was not. Upon further review, the project was
deemed eligible for reimbursement.
Effect: CDBG project might not be eligible to receive reimbursement for expenditures.
Cause: Lack of proper internal control over HUD approvals.
Questioned Cost: This resulted in no questioned costs.
Recommendation: Management should implement controls to ensure that HUD approvals are
obtained timely.
Views of Responsible Officials and Planned Corrective Actions: The City agrees with this
finding. Please refer to the Corrective Action Plan section of this report.
Material Weakness, Eligibility
Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal
control procedures in place to ensure that applicants have all required documentation in their file. In
accordance with 24 CFR Part 5 Subpart F, the City must maintain documentation to support tenant
eligibility.
Condition: The City did not follow procedures to ensure the proper eligibility determination were
made and documented.
Context: Of the 180 applicants during the current year valued at $495,432, we examined 36
(valued at $99,685) and determined that 2 (6%) applicants did not have properly calculated
resources. Upon further review and recalculation, the two applicants were deemed eligible.
Effect: Participants could receive benefits for which they are not eligible.
Cause: Weakness in implementation of controls over eligibility procedures.
Questioned Cost: None. This finding represents an internal control issue; therefore, questioned
costs are not applicable.
Recommendation: Tenant files should be reviewed to verify that calculations are accurate, and all
required documentation has been obtained before approving benefits.
Views of Responsible Officials and Planned Corrective Actions: The City agrees with this
finding. Please refer to the Corrective Action Plan section of this report.
201
Non-Material Non‐Compliance
Significant Deficiency, Special Tests and Provisions
Criteria: In accordance with 24 CFR 964.150, when tenant participation funds are provided to a
Public Housing Authority (PHA), the PHA must provide those funds to duly elected resident
councils. Funding provided by a PHA to a duly elected resident council may be made only under a
written agreement between the PHA and the resident council that includes a resident council
budget. The agreement must require the local resident councils to account to the PHA for the use of
the funds and permit the PHA to inspect and audit the resident council’s financial records related to
the agreement.
Condition: The City did not follow procedures to ensure compliance of tenant participation fund
requirements.
Context: The tenant participation fund agreement was not current and expired in 2018. We
sampled 7 expenditure and supporting documentation reported to the PHA to determine if resident
council expenditure is consistent with the resident council budget. We noted that 4 (58%)
expenditures had proper supporting documentations but were not listed in the resident council
budget.
Effect: Expenditure made that are not consistent with the resident council budget.
Cause: Lack of proper internal control over tenant participation funds.
Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned
costs when likely questioned costs are greater than $25,000. Likely questioned costs do not exceed
$25,000.
Recommendation: Management should obtain a current agreement and implement controls to
ensure that tenant participation funds are in place and properly accounted for.
Views of Responsible Officials and Planned Corrective Actions: The City agrees with this
finding. Please refer to the Corrective Action Plan section of this report.
Material Non‐Compliance
Material Weakness, Special Tests and Provisions
Criteria: In accordance with 24 CFR sections 982.158(d) and 982.404, units under housing
assistance payment (HAP) contract that fail to meet Housing Quality Standards (HQS), the Public
Housing Authority (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 HAPs beginning no later
than the first of the month following the specified correction period or must terminate the HAP
contract.
Condition: The City did not follow procedures to ensure that the HQS were corrected or
subsequent procedures to stop HAP were not enforced.
Context: Of the 130 failed inspections during the current year, we examined 26 and determined
that 22 (85% valued at $110,332) failed inspections were not corrected or the HAP were not
stopped timely.
Effect: Owner could receive benefits for which they are not eligible.
Cause: Lack of proper internal control over HQS enforcement.
Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned
costs when likely questioned costs are greater than $25,000. The sample results identified $110,332
in known questioned costs.
Recommendation: Management should implement controls to ensure that HQS enforcement
procedures are followed timely.
Views of Responsible Officials and Planned Corrective Actions: The City agrees with this
finding. Please refer to the Corrective Action Plan section of this report.