FAC Explorer

Audit 328993

FY End
2024-03-31
Total Expended
$17.31M
Findings
6
Programs
5
Organization: Housing Authority of the City of Independence (MO)
Year: 2024 Accepted: 2024-11-19
Auditor: Smco

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
508378 2024-001 Significant Deficiency - A
508379 2024-002 Significant Deficiency - N
508380 2024-003 Significant Deficiency Yes N
1084820 2024-001 Significant Deficiency - A
1084821 2024-002 Significant Deficiency - N
1084822 2024-003 Significant Deficiency Yes N

Programs

ALN Program Spent Major Findings
14.871 Section 8 Housing Choice Vouchers $14.84M Yes 3
14.850 Public and Indian Housing $1.58M - 0
14.872 Public Housing Capital Fund $601,358 - 0
14.895 Jobs-Plus Pilot Initiative $248,816 - 0
14.870 Resident Opportunity and Supportive Services - Service Coordinators $38,552 - 0

Contacts

Name Title Type
M7HSMS617Z56 Tina Bartlett Auditee
8168369200 Cole Monroe Auditor
No contacts on file

Notes to SEFA

Title: NOTE 1: SCOPE OF PRESENTATION Accounting Policies: The accompanying schedule presents the expenditures incurred (and related awards received) by the Independence Housing Authority (Authority) that are reimbursable under federal programs of federal agencies providing financial assistance awards. For the purpose of this schedule, only the portion of the program expenditures reimbursable with such federal funds is reported in the accompanying schedule. Program expenditures in excess of the maximum federal reimbursement authorized or the portion of the program expenditures that were funded with local or other nonfederal funds are excluded from the accompanying schedule. This schedule also only includes the amounts expended by the Authority, none of the amount expended, if any, by the blended or discretely present component units have been included. The expenditures included in the accompanying schedule were reported on the accrual basis of accounting. Expenditures are recognized in the accounting period in which the related liability is incurred. Expenditures reported included any property or equipment acquisitions incurred under the federal program. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements. De Minimis Rate Used: N Rate Explanation: The Authority has not elected to use the 10% de minimis indirect cost rate as allowed in the Uniform Guidance, section 414. The accompanying schedule presents the expenditures incurred (and related awards received) by the Independence Housing Authority (Authority) that are reimbursable under federal programs of federal agencies providing financial assistance awards. For the purpose of this schedule, only the portion of the program expenditures reimbursable with such federal funds is reported in the accompanying schedule. Program expenditures in excess of the maximum federal reimbursement authorized or the portion of the program expenditures that were funded with local or other nonfederal funds are excluded from the accompanying schedule. This schedule also only includes the amounts expended by the Authority, none of the amount expended, if any, by the blended or discretely present component units have been included.
Title: NOTE 2: BASIS OF ACCOUNTING Accounting Policies: The accompanying schedule presents the expenditures incurred (and related awards received) by the Independence Housing Authority (Authority) that are reimbursable under federal programs of federal agencies providing financial assistance awards. For the purpose of this schedule, only the portion of the program expenditures reimbursable with such federal funds is reported in the accompanying schedule. Program expenditures in excess of the maximum federal reimbursement authorized or the portion of the program expenditures that were funded with local or other nonfederal funds are excluded from the accompanying schedule. This schedule also only includes the amounts expended by the Authority, none of the amount expended, if any, by the blended or discretely present component units have been included. The expenditures included in the accompanying schedule were reported on the accrual basis of accounting. Expenditures are recognized in the accounting period in which the related liability is incurred. Expenditures reported included any property or equipment acquisitions incurred under the federal program. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements. De Minimis Rate Used: N Rate Explanation: The Authority has not elected to use the 10% de minimis indirect cost rate as allowed in the Uniform Guidance, section 414. The expenditures included in the accompanying schedule were reported on the accrual basis of accounting. Expenditures are recognized in the accounting period in which the related liability is incurred. Expenditures reported included any property or equipment acquisitions incurred under the federal program. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements.
Title: NOTE 3: 10% DE MINIMIS INDIRECT COST RATE Accounting Policies: The accompanying schedule presents the expenditures incurred (and related awards received) by the Independence Housing Authority (Authority) that are reimbursable under federal programs of federal agencies providing financial assistance awards. For the purpose of this schedule, only the portion of the program expenditures reimbursable with such federal funds is reported in the accompanying schedule. Program expenditures in excess of the maximum federal reimbursement authorized or the portion of the program expenditures that were funded with local or other nonfederal funds are excluded from the accompanying schedule. This schedule also only includes the amounts expended by the Authority, none of the amount expended, if any, by the blended or discretely present component units have been included. The expenditures included in the accompanying schedule were reported on the accrual basis of accounting. Expenditures are recognized in the accounting period in which the related liability is incurred. Expenditures reported included any property or equipment acquisitions incurred under the federal program. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements. De Minimis Rate Used: N Rate Explanation: The Authority has not elected to use the 10% de minimis indirect cost rate as allowed in the Uniform Guidance, section 414. The Authority has not elected to use the 10% de minimis indirect cost rate as allowed in the Uniform Guidance, section 414.

Finding Details

Finding 2024-001
2024-001 INTERPROGRAM DUE TO/DUE FROM ACTIVITIES Questioned Costs None Criteria According to PHA Accounting Brief #14 Due To/Due From relationships should not be reported under accrual accounting simply from the result of a PHA using a common checking or working capital account. Because of the basic nature of most Federal and state programs, resources from one program cannot be used to support the costs of another program. HUD views Due To’s and Due From’s reported in a PHA’s Federal programs as possible indicators of non-compliance. Condition The Authority has interfund receivables and payables that have not been repaid as of fiscal year end. Context The Authority reported a material ($505,884 in total, $478,661in HCV program) amount of interfund receivables and payables, which is a significant red flag for HUD reviewers. Cause The Authority was not effectively monitoring and managing interfund program balances in order to ensure that programs were not spending funds that they do not have. Effect The use of Due to/ Due From transactions reported in the Authority's financials, which could signify to HUD that one or more programs have used resources to cover the costs of another program. Recommendations The Housing Authority should expand it's controls over cash reconciliations to include a step to verify if a program, fund or component unit is accurate along with the entire cash pool. Also interfund should be repaid monthly at a minimum. Management Views Management agrees with the finding, see Management's corrective action plan.
Finding 2024-002
2024-002 Utilities Allowance Calcuation Questioned Costs None Criteria "In accordance with the 2014 Appropriations Act Section 242, the utility allowance for a family shall be the lower of: (1) The utility allowance amount for the family unit size; or (2) the utility allowance amount for the unit size of the unit rented by the family. However, upon the request of a family that includes a person with disabilities, the PHA must approve a utility allowance higher than the applicable amount if such a higher utility allowance is needed as a reasonable accommodation in accordance with HUD's regulations in 24 CFR part 8 to make the program accessible to and usable by the family member with a disability. This provision applies only to vouchers issued after the effective date of this notice (June 12, 2014) and to current program participants. For current program participants, a PHA must implement the new allowance at the family's next annual reexamination, provided that the PHA is able to provide a family with at least 60 days' notice prior to the reexamination. " Condition During the audit, we noted multiple HUD Forms 50058 had utility allowances calculated not in accordance with the above criteria. Context The Authority had roughly 1,490 vouchers issued throughout the fiscal year under examination which would translate to 17,890 housing assistance payment transactions for the year. Of these we reviewed 40 individual housing assistance payment transactions, and found 2 instances of noncompliance. Cause Personnel responsible for calculating the utility allowances were not informed of requirements and no internal controls were in place to ensure compliance. Effect The Authority was in violation of the Federal Regulation which resulted in errors in calculating housing assistance payments (HAP) and utility reimbursement payments. Recommendations We recommend that Management implement procedures to ensure compliance with the above regulations as it relates to the Section 8 Housing Choice Voucher Program. Management Views Management agrees with the finding, see Management's corrective action plan.
Finding 2024-003
2024-003 Significant Deficiency - Special Tests (N) - HQS Inspections Questioned Costs None Criteria "The PHA must inspect the unit leased to a family at least bi-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 §§982.405, 983.103). " Condition During our audit, we noted multiple instances where failed HQS inspections did not have the proper support for the failed HQS inspection. Therefore, the Authority falls out of the HQS inspection compliance as noted in the Uniform Guidance Part IV HUD 14.871. Context We selected a sample of 23 failed inspections that occurred during the fiscal year. Out of the 23 samples selected, 4 of those lacked the proper documentation of a follow up passed inspection. Cause Controls over compliance associated with the Authority’s grants of federal funds are inadequate. Effect The Authority is non‐compliant with the federal regulations over this federal program, this could potentially result in significant operating and financial penalties. Recommendations We suggest the Authority structure a system capable of properly overseeing compliance with regulations relative to these grants as well as maintaining more accurate and complete documentation of adherence to compliance. Management Views Management agrees and has a corrective plan detailing the course of action to be taken in the next fiscal year.
Finding 2024-001
2024-001 INTERPROGRAM DUE TO/DUE FROM ACTIVITIES Questioned Costs None Criteria According to PHA Accounting Brief #14 Due To/Due From relationships should not be reported under accrual accounting simply from the result of a PHA using a common checking or working capital account. Because of the basic nature of most Federal and state programs, resources from one program cannot be used to support the costs of another program. HUD views Due To’s and Due From’s reported in a PHA’s Federal programs as possible indicators of non-compliance. Condition The Authority has interfund receivables and payables that have not been repaid as of fiscal year end. Context The Authority reported a material ($505,884 in total, $478,661in HCV program) amount of interfund receivables and payables, which is a significant red flag for HUD reviewers. Cause The Authority was not effectively monitoring and managing interfund program balances in order to ensure that programs were not spending funds that they do not have. Effect The use of Due to/ Due From transactions reported in the Authority's financials, which could signify to HUD that one or more programs have used resources to cover the costs of another program. Recommendations The Housing Authority should expand it's controls over cash reconciliations to include a step to verify if a program, fund or component unit is accurate along with the entire cash pool. Also interfund should be repaid monthly at a minimum. Management Views Management agrees with the finding, see Management's corrective action plan.
Finding 2024-002
2024-002 Utilities Allowance Calcuation Questioned Costs None Criteria "In accordance with the 2014 Appropriations Act Section 242, the utility allowance for a family shall be the lower of: (1) The utility allowance amount for the family unit size; or (2) the utility allowance amount for the unit size of the unit rented by the family. However, upon the request of a family that includes a person with disabilities, the PHA must approve a utility allowance higher than the applicable amount if such a higher utility allowance is needed as a reasonable accommodation in accordance with HUD's regulations in 24 CFR part 8 to make the program accessible to and usable by the family member with a disability. This provision applies only to vouchers issued after the effective date of this notice (June 12, 2014) and to current program participants. For current program participants, a PHA must implement the new allowance at the family's next annual reexamination, provided that the PHA is able to provide a family with at least 60 days' notice prior to the reexamination. " Condition During the audit, we noted multiple HUD Forms 50058 had utility allowances calculated not in accordance with the above criteria. Context The Authority had roughly 1,490 vouchers issued throughout the fiscal year under examination which would translate to 17,890 housing assistance payment transactions for the year. Of these we reviewed 40 individual housing assistance payment transactions, and found 2 instances of noncompliance. Cause Personnel responsible for calculating the utility allowances were not informed of requirements and no internal controls were in place to ensure compliance. Effect The Authority was in violation of the Federal Regulation which resulted in errors in calculating housing assistance payments (HAP) and utility reimbursement payments. Recommendations We recommend that Management implement procedures to ensure compliance with the above regulations as it relates to the Section 8 Housing Choice Voucher Program. Management Views Management agrees with the finding, see Management's corrective action plan.
Finding 2024-003
2024-003 Significant Deficiency - Special Tests (N) - HQS Inspections Questioned Costs None Criteria "The PHA must inspect the unit leased to a family at least bi-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 §§982.405, 983.103). " Condition During our audit, we noted multiple instances where failed HQS inspections did not have the proper support for the failed HQS inspection. Therefore, the Authority falls out of the HQS inspection compliance as noted in the Uniform Guidance Part IV HUD 14.871. Context We selected a sample of 23 failed inspections that occurred during the fiscal year. Out of the 23 samples selected, 4 of those lacked the proper documentation of a follow up passed inspection. Cause Controls over compliance associated with the Authority’s grants of federal funds are inadequate. Effect The Authority is non‐compliant with the federal regulations over this federal program, this could potentially result in significant operating and financial penalties. Recommendations We suggest the Authority structure a system capable of properly overseeing compliance with regulations relative to these grants as well as maintaining more accurate and complete documentation of adherence to compliance. Management Views Management agrees and has a corrective plan detailing the course of action to be taken in the next fiscal year.