FAC Explorer

Audit 335343

FY End
2024-03-31
Total Expended
$1.88M
Findings
14
Programs
2
Organization: Housing Authority of the City of Marianna (AR)
Year: 2024 Accepted: 2024-12-31
Auditor: Miller & Rose PA

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
517338 2024-001 Material Weakness Yes B
517339 2024-002 Significant Deficiency Yes E
517340 2024-003 Significant Deficiency Yes N
517341 2024-004 Significant Deficiency Yes I
517342 2024-001 Material Weakness Yes B
517343 2024-003 Significant Deficiency Yes N
517344 2024-004 Significant Deficiency Yes I
1093780 2024-001 Material Weakness Yes B
1093781 2024-002 Significant Deficiency Yes E
1093782 2024-003 Significant Deficiency Yes N
1093783 2024-004 Significant Deficiency Yes I
1093784 2024-001 Material Weakness Yes B
1093785 2024-003 Significant Deficiency Yes N
1093786 2024-004 Significant Deficiency Yes I

Programs

ALN Program Spent Major Findings
14.850 Public and Indian Housing $1.06M Yes 4
14.872 Public Housing Capital Fund $819,446 Yes 3

Contacts

Name Title Type
U387TETDED43 Ms. Clarice Sneed Auditee
8702952691 Steave Miller Auditor
No contacts on file

Notes to SEFA

Title: NOTE 1 – BASIS OF PRESENTATION Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts, if any, shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: Housing Authority of the City of Marianna has not made an election to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal award activity of Housing Authority of the City of Marianna under programs of the federal government for the year ended March 31, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of Housing Authority of the City of Marianna, it is not intended to and does not present the financial position, changes in net position, or cash flows of Housing Authority of the City of Marianna.
Title: NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts, if any, shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: Housing Authority of the City of Marianna has not made an election to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts, if any, shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.
Title: NOTE 3 – INDIRECT COST RATE Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts, if any, shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: Housing Authority of the City of Marianna has not made an election to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Housing Authority of the City of Marianna has not made an election to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.

Finding Details

Finding 2024-001
Material Misclassifications • Criteria: A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions to prevent or detect misstatements of the financial statements on a timely basis. AU-C Section 265 Communication Internal Control Related Matters Identified in an Audit, identifies deficiencies in controls over the period-end financial reporting process, including controls over procedures used to enter transactions and journal entries into the general ledger and to record recurring and nonrecurring adjustments to the financial statements that was not initially identified by the entity’s internal controls even if management subsequently corrects the misstatement. • Condition: Material misclassifications in the financial statements under audit. • Context: Several items were discovered that were misclassified. More specifically, several disbursements were noted that contained tangible assets that were more than the capitalization threshold and the useful lives of those assets exceeded one year. • Effect: Expenses were overstated by $598,437 and capital assets were understated by $598,437. • Recommendation: Review procedures for proper classification of expenditures and enforce capitalization policy. • Views of Responsible Officials and Planned Corrective Actions: We will review our policies and procedures regarding classification of expenditures. We will
Finding 2024-002
– Tenant Eligibility Requirements • Federal Program: Public and Indian Housing, Federal Assistance Listing No. 14.850 • Criteria or specific requirement: Eligibility requirements in accordance with 24 CFR 960 relating to admission to, and occupancy of, public housing. • Condition: The audit identified exceptions in tenant files exams relating to rent calculation, income, and deduction verification, executed Forms 50058, and an overdue reexamination. • Context: In a review of twenty-three tenant eligibility files: 1. One file contained a rent calculation error. 2. Two files were noted where the HUD-50058 did not agree with the tenant’s file. 3. One file lacked verification of income. 4. One file did not have support for childcare costs. 5. One file was noted with an overdue re-examination. • Effect: The errors noted are due to lack of supporting documentation. • Cause: Weakness in internal controls over tenant’s annual certifications relating to proper documentation and calculation of rent. • Identification as a repeat finding: This is a repeat finding (See 2023-003). • Recommendation for Corrective Actions: Establish procedures for management review and supervision over tenant’s annual certifications. Specific internal control procedures should be implemented to ensure, for both family income examinations and reexaminations, documentation in the family file of (1) waiting list documentation; (2) properly executed rent choice documentation; (3) utility allowance schedule annually and (4) other factors that affect the determination of adjusted income or income- based rent in accordance with CFR section 960. • Views of Responsible Officials and Planned Corrective Actions: We will review tenant’s files for the deficiencies identified above and implement new internal control procedures to correct these conditions. We will also provide increased supervision and training over this area. We anticipate a complete resolution of this type of error by February 28, 2025.
Finding 2024-003
Davis-Bacon Act Wage Compliance • Federal Program: Public and Indian Housing, FALN No. 14.850 and Public Housing Capital Fund, FALN No. 14.872 • Criteria: The Davis-Bacon Act requires that all laborers and mechanics employed by contractors or subcontractors for work on construction contracts more than $2,000 financed by Federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the DOL (40 USC 276a to 276a-7). • Condition: A review of internal controls over monitoring the wage rates for compliance with the Davis Bacon Act revealed that contracts did not include the required prevailing wage rate clause. • Effect: Wage rates may not be in compliance with federal regulations. • Recommendation: Internal controls should be established to collect, review, and monitor wages paid by contractors to its workers as well as ensure all construction contracts greater than $2,000 should include the required prevailing wage rate clause. The Authority should enforce submission of payrolls by withholding funds until the contractor has complied with the certified payroll submission. The Authority should review each payroll to ensure wages are at least the minimum wage rate for the worker’s classification. The Authority should periodically interview construction workers on site to verify the validity of the payroll information. • View of Responsible Officials and Planned Corrective Actions: We were not aware of the requirement to include the required prevailing wage rate clause in every contract greater than $2,000. We will ensure the required clause is included in all construction contracts greater than $2,000.
Finding 2024-004
Procurement Procedures • Federal Program: Public and Indian Housing, FALN No. 14.850 and Public Housing Capital Fund, FALN No. 14.872 • Criteria: Housing Authorities are required to follow a written procurement policy to provide full and open competition. The Authority has not adopted a customized procurement plan but rather defaults to HUD Handbook 7460.8 REV2, dated 2/2007. The handbook states that the Authority must solicit price quotes from an adequate number of qualified sources (generally defined as not less than three) for purchases exceeding the micro purchase limit ($2,000) but less than the sealed bid threshold of $100,000. In situations where the multiple price quotes are not available, the Authority should document its justification for awarding the contract. • Condition: Several instances of smaller contracts were executed without documented bids or quotes nor were noncompetitive proposals properly documented. We noted disbursements totaling $266,715 without proper solicitation and/or documentation of procurement action which we consider to be questioned costs. • Effect: Full and open competition may not have been provided and the lack of sufficient quotes may provide an environment where the contract price may not be reflective of the open market. Recommendation: The Authority should establish procedures to solicit enough price quotes. In a situation where an adequate number of price quotes cannot be obtained, the Authority should document their conclusion as to why the contract should be approved and perform a cost analysis to ensure the costs are. • reasonable. The Authority should consider soliciting quotes on an annual basis for certain repeated contracts (unit painting, unit turnovers, etc.) to help alleviate the documentation burden. • Views of Responsible Officials and Planned Corrective Actions: We have a limited number of competent contractors working in our area but will attempt to obtain more price quotes. In cases where we do not receive an adequate number of price quotes, we will document our reason for awarding the contract and document the cost analysis to determine reasonableness of the costs. We began documenting this procurement at near the end of year, March 31, 2024.
Finding 2024-001
Material Misclassifications • Criteria: A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions to prevent or detect misstatements of the financial statements on a timely basis. AU-C Section 265 Communication Internal Control Related Matters Identified in an Audit, identifies deficiencies in controls over the period-end financial reporting process, including controls over procedures used to enter transactions and journal entries into the general ledger and to record recurring and nonrecurring adjustments to the financial statements that was not initially identified by the entity’s internal controls even if management subsequently corrects the misstatement. • Condition: Material misclassifications in the financial statements under audit. • Context: Several items were discovered that were misclassified. More specifically, several disbursements were noted that contained tangible assets that were more than the capitalization threshold and the useful lives of those assets exceeded one year. • Effect: Expenses were overstated by $598,437 and capital assets were understated by $598,437. • Recommendation: Review procedures for proper classification of expenditures and enforce capitalization policy. • Views of Responsible Officials and Planned Corrective Actions: We will review our policies and procedures regarding classification of expenditures. We will
Finding 2024-003
Davis-Bacon Act Wage Compliance • Federal Program: Public and Indian Housing, FALN No. 14.850 and Public Housing Capital Fund, FALN No. 14.872 • Criteria: The Davis-Bacon Act requires that all laborers and mechanics employed by contractors or subcontractors for work on construction contracts more than $2,000 financed by Federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the DOL (40 USC 276a to 276a-7). • Condition: A review of internal controls over monitoring the wage rates for compliance with the Davis Bacon Act revealed that contracts did not include the required prevailing wage rate clause. • Effect: Wage rates may not be in compliance with federal regulations. • Recommendation: Internal controls should be established to collect, review, and monitor wages paid by contractors to its workers as well as ensure all construction contracts greater than $2,000 should include the required prevailing wage rate clause. The Authority should enforce submission of payrolls by withholding funds until the contractor has complied with the certified payroll submission. The Authority should review each payroll to ensure wages are at least the minimum wage rate for the worker’s classification. The Authority should periodically interview construction workers on site to verify the validity of the payroll information. • View of Responsible Officials and Planned Corrective Actions: We were not aware of the requirement to include the required prevailing wage rate clause in every contract greater than $2,000. We will ensure the required clause is included in all construction contracts greater than $2,000.
Finding 2024-004
Procurement Procedures • Federal Program: Public and Indian Housing, FALN No. 14.850 and Public Housing Capital Fund, FALN No. 14.872 • Criteria: Housing Authorities are required to follow a written procurement policy to provide full and open competition. The Authority has not adopted a customized procurement plan but rather defaults to HUD Handbook 7460.8 REV2, dated 2/2007. The handbook states that the Authority must solicit price quotes from an adequate number of qualified sources (generally defined as not less than three) for purchases exceeding the micro purchase limit ($2,000) but less than the sealed bid threshold of $100,000. In situations where the multiple price quotes are not available, the Authority should document its justification for awarding the contract. • Condition: Several instances of smaller contracts were executed without documented bids or quotes nor were noncompetitive proposals properly documented. We noted disbursements totaling $266,715 without proper solicitation and/or documentation of procurement action which we consider to be questioned costs. • Effect: Full and open competition may not have been provided and the lack of sufficient quotes may provide an environment where the contract price may not be reflective of the open market. Recommendation: The Authority should establish procedures to solicit enough price quotes. In a situation where an adequate number of price quotes cannot be obtained, the Authority should document their conclusion as to why the contract should be approved and perform a cost analysis to ensure the costs are. • reasonable. The Authority should consider soliciting quotes on an annual basis for certain repeated contracts (unit painting, unit turnovers, etc.) to help alleviate the documentation burden. • Views of Responsible Officials and Planned Corrective Actions: We have a limited number of competent contractors working in our area but will attempt to obtain more price quotes. In cases where we do not receive an adequate number of price quotes, we will document our reason for awarding the contract and document the cost analysis to determine reasonableness of the costs. We began documenting this procurement at near the end of year, March 31, 2024.
Finding 2024-001
Material Misclassifications • Criteria: A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions to prevent or detect misstatements of the financial statements on a timely basis. AU-C Section 265 Communication Internal Control Related Matters Identified in an Audit, identifies deficiencies in controls over the period-end financial reporting process, including controls over procedures used to enter transactions and journal entries into the general ledger and to record recurring and nonrecurring adjustments to the financial statements that was not initially identified by the entity’s internal controls even if management subsequently corrects the misstatement. • Condition: Material misclassifications in the financial statements under audit. • Context: Several items were discovered that were misclassified. More specifically, several disbursements were noted that contained tangible assets that were more than the capitalization threshold and the useful lives of those assets exceeded one year. • Effect: Expenses were overstated by $598,437 and capital assets were understated by $598,437. • Recommendation: Review procedures for proper classification of expenditures and enforce capitalization policy. • Views of Responsible Officials and Planned Corrective Actions: We will review our policies and procedures regarding classification of expenditures. We will
Finding 2024-002
– Tenant Eligibility Requirements • Federal Program: Public and Indian Housing, Federal Assistance Listing No. 14.850 • Criteria or specific requirement: Eligibility requirements in accordance with 24 CFR 960 relating to admission to, and occupancy of, public housing. • Condition: The audit identified exceptions in tenant files exams relating to rent calculation, income, and deduction verification, executed Forms 50058, and an overdue reexamination. • Context: In a review of twenty-three tenant eligibility files: 1. One file contained a rent calculation error. 2. Two files were noted where the HUD-50058 did not agree with the tenant’s file. 3. One file lacked verification of income. 4. One file did not have support for childcare costs. 5. One file was noted with an overdue re-examination. • Effect: The errors noted are due to lack of supporting documentation. • Cause: Weakness in internal controls over tenant’s annual certifications relating to proper documentation and calculation of rent. • Identification as a repeat finding: This is a repeat finding (See 2023-003). • Recommendation for Corrective Actions: Establish procedures for management review and supervision over tenant’s annual certifications. Specific internal control procedures should be implemented to ensure, for both family income examinations and reexaminations, documentation in the family file of (1) waiting list documentation; (2) properly executed rent choice documentation; (3) utility allowance schedule annually and (4) other factors that affect the determination of adjusted income or income- based rent in accordance with CFR section 960. • Views of Responsible Officials and Planned Corrective Actions: We will review tenant’s files for the deficiencies identified above and implement new internal control procedures to correct these conditions. We will also provide increased supervision and training over this area. We anticipate a complete resolution of this type of error by February 28, 2025.
Finding 2024-003
Davis-Bacon Act Wage Compliance • Federal Program: Public and Indian Housing, FALN No. 14.850 and Public Housing Capital Fund, FALN No. 14.872 • Criteria: The Davis-Bacon Act requires that all laborers and mechanics employed by contractors or subcontractors for work on construction contracts more than $2,000 financed by Federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the DOL (40 USC 276a to 276a-7). • Condition: A review of internal controls over monitoring the wage rates for compliance with the Davis Bacon Act revealed that contracts did not include the required prevailing wage rate clause. • Effect: Wage rates may not be in compliance with federal regulations. • Recommendation: Internal controls should be established to collect, review, and monitor wages paid by contractors to its workers as well as ensure all construction contracts greater than $2,000 should include the required prevailing wage rate clause. The Authority should enforce submission of payrolls by withholding funds until the contractor has complied with the certified payroll submission. The Authority should review each payroll to ensure wages are at least the minimum wage rate for the worker’s classification. The Authority should periodically interview construction workers on site to verify the validity of the payroll information. • View of Responsible Officials and Planned Corrective Actions: We were not aware of the requirement to include the required prevailing wage rate clause in every contract greater than $2,000. We will ensure the required clause is included in all construction contracts greater than $2,000.
Finding 2024-004
Procurement Procedures • Federal Program: Public and Indian Housing, FALN No. 14.850 and Public Housing Capital Fund, FALN No. 14.872 • Criteria: Housing Authorities are required to follow a written procurement policy to provide full and open competition. The Authority has not adopted a customized procurement plan but rather defaults to HUD Handbook 7460.8 REV2, dated 2/2007. The handbook states that the Authority must solicit price quotes from an adequate number of qualified sources (generally defined as not less than three) for purchases exceeding the micro purchase limit ($2,000) but less than the sealed bid threshold of $100,000. In situations where the multiple price quotes are not available, the Authority should document its justification for awarding the contract. • Condition: Several instances of smaller contracts were executed without documented bids or quotes nor were noncompetitive proposals properly documented. We noted disbursements totaling $266,715 without proper solicitation and/or documentation of procurement action which we consider to be questioned costs. • Effect: Full and open competition may not have been provided and the lack of sufficient quotes may provide an environment where the contract price may not be reflective of the open market. Recommendation: The Authority should establish procedures to solicit enough price quotes. In a situation where an adequate number of price quotes cannot be obtained, the Authority should document their conclusion as to why the contract should be approved and perform a cost analysis to ensure the costs are. • reasonable. The Authority should consider soliciting quotes on an annual basis for certain repeated contracts (unit painting, unit turnovers, etc.) to help alleviate the documentation burden. • Views of Responsible Officials and Planned Corrective Actions: We have a limited number of competent contractors working in our area but will attempt to obtain more price quotes. In cases where we do not receive an adequate number of price quotes, we will document our reason for awarding the contract and document the cost analysis to determine reasonableness of the costs. We began documenting this procurement at near the end of year, March 31, 2024.
Finding 2024-001
Material Misclassifications • Criteria: A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions to prevent or detect misstatements of the financial statements on a timely basis. AU-C Section 265 Communication Internal Control Related Matters Identified in an Audit, identifies deficiencies in controls over the period-end financial reporting process, including controls over procedures used to enter transactions and journal entries into the general ledger and to record recurring and nonrecurring adjustments to the financial statements that was not initially identified by the entity’s internal controls even if management subsequently corrects the misstatement. • Condition: Material misclassifications in the financial statements under audit. • Context: Several items were discovered that were misclassified. More specifically, several disbursements were noted that contained tangible assets that were more than the capitalization threshold and the useful lives of those assets exceeded one year. • Effect: Expenses were overstated by $598,437 and capital assets were understated by $598,437. • Recommendation: Review procedures for proper classification of expenditures and enforce capitalization policy. • Views of Responsible Officials and Planned Corrective Actions: We will review our policies and procedures regarding classification of expenditures. We will
Finding 2024-003
Davis-Bacon Act Wage Compliance • Federal Program: Public and Indian Housing, FALN No. 14.850 and Public Housing Capital Fund, FALN No. 14.872 • Criteria: The Davis-Bacon Act requires that all laborers and mechanics employed by contractors or subcontractors for work on construction contracts more than $2,000 financed by Federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the DOL (40 USC 276a to 276a-7). • Condition: A review of internal controls over monitoring the wage rates for compliance with the Davis Bacon Act revealed that contracts did not include the required prevailing wage rate clause. • Effect: Wage rates may not be in compliance with federal regulations. • Recommendation: Internal controls should be established to collect, review, and monitor wages paid by contractors to its workers as well as ensure all construction contracts greater than $2,000 should include the required prevailing wage rate clause. The Authority should enforce submission of payrolls by withholding funds until the contractor has complied with the certified payroll submission. The Authority should review each payroll to ensure wages are at least the minimum wage rate for the worker’s classification. The Authority should periodically interview construction workers on site to verify the validity of the payroll information. • View of Responsible Officials and Planned Corrective Actions: We were not aware of the requirement to include the required prevailing wage rate clause in every contract greater than $2,000. We will ensure the required clause is included in all construction contracts greater than $2,000.
Finding 2024-004
Procurement Procedures • Federal Program: Public and Indian Housing, FALN No. 14.850 and Public Housing Capital Fund, FALN No. 14.872 • Criteria: Housing Authorities are required to follow a written procurement policy to provide full and open competition. The Authority has not adopted a customized procurement plan but rather defaults to HUD Handbook 7460.8 REV2, dated 2/2007. The handbook states that the Authority must solicit price quotes from an adequate number of qualified sources (generally defined as not less than three) for purchases exceeding the micro purchase limit ($2,000) but less than the sealed bid threshold of $100,000. In situations where the multiple price quotes are not available, the Authority should document its justification for awarding the contract. • Condition: Several instances of smaller contracts were executed without documented bids or quotes nor were noncompetitive proposals properly documented. We noted disbursements totaling $266,715 without proper solicitation and/or documentation of procurement action which we consider to be questioned costs. • Effect: Full and open competition may not have been provided and the lack of sufficient quotes may provide an environment where the contract price may not be reflective of the open market. Recommendation: The Authority should establish procedures to solicit enough price quotes. In a situation where an adequate number of price quotes cannot be obtained, the Authority should document their conclusion as to why the contract should be approved and perform a cost analysis to ensure the costs are. • reasonable. The Authority should consider soliciting quotes on an annual basis for certain repeated contracts (unit painting, unit turnovers, etc.) to help alleviate the documentation burden. • Views of Responsible Officials and Planned Corrective Actions: We have a limited number of competent contractors working in our area but will attempt to obtain more price quotes. In cases where we do not receive an adequate number of price quotes, we will document our reason for awarding the contract and document the cost analysis to determine reasonableness of the costs. We began documenting this procurement at near the end of year, March 31, 2024.