2022-002 The County had inadequate internal controls for ensuring compliance with the Housing Quality Standards inspection requirements of its Home Investment Partnerships Program. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2022, the County spent $3,010,680 under the Home Investment Partnerships Program (HOME Program). The objectives of the HOME Program include: (1) Expanding the supply of decent and affordable housing, particularly housing for people with low-and very low-incomes (2) Strengthening the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing (3) Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing (4) Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. These inspections must be completed no less than: ? Every three years for projects containing one to four units ? Every two years for projects containing five to 25 units ? Every year for projects containing 26 or more units However, in response to the COVID-19 pandemic, the U.S. Department of Housing and Urban Development (HUD) issued a waiver of Housing Quality Standards (HQS) inspections. The waiver period spanned from April 10, 2020, to December 31, 2021, and required on-site inspections to resume within 180 days of the end of the waiver period. Our audit found the County did not have adequate internal controls for ensuring compliance with the HOME Program?s HQS requirement to resume on-site inspections when the HUD waiver expired. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition The County was operating under COVID-19 pandemic protocols during the audit period. The state and County rescinded the emergency order on October 31, 2022, and the federal government rescinded the emergency declaration on May 11, 2023. Therefore, during the period under audit, grant administrators were operating with limited in-person contact, and they determined that HQS inspections should be delayed until fiscal year 2023 when all levels of emergency orders were lifted. Effect of Condition The County did not conduct any HQS inspections during fiscal year 2022. As such, the County could not demonstrate that the HOME Program properties it was managing met HQS inspection requirements and were being maintained in a decent, safe and sanitary manner. Recommendation We recommend the County strengthen internal controls to ensure its HOME Program properties meet HQS compliance requirements. Specifically, the County should ensure it performs HQS inspections within the prescribed timeframe. County?s Response The County disagrees that there were inadequate controls. The County has had and does have procedures for conducting physical inspections in conformance with statutory and regulatory guidance and maintains a database for tracking inspections due and completed. Those procedures were suspended as a direct result of the COVID-19 pandemic and associated federal, state, and local directives and guidance. The County has been fully aware of the institution of U.S. Department of Housing and Urban Development (HUD) waiver of the requirement to conduct physical inspections of HOME units as well as their notification that inspections should be resumed. The County communicated with HUD regarding the suspension of HOME inspections during the public health emergency and continuing COVID-19 protocols that impacted the timing for resuming inspections. The County planned for the resumption of inspections and updated those plans based on the COVID-19 emergency and protocols at the federal, state, and local levels which did not align with the end of the HUD waiver nationally. The County and state COVID-19 health emergency did not end until October 31, 2022 and the federal COVID-19 National Public Health emergency did not end until May 11, 2023. The County planned for safely resuming physical inspections at the end of the federal emergency declaration taking into consideration the risk for County staff, agency staff, and tenants to best address the regulatory requirements during this global pandemic. The County communicated with the HUD Seattle Field Office on the planned resumption of HOME unit inspections. In addition to communications with HUD, the information was included in the HUD Consolidated Annual Performance and Evaluation Report (CAPER). The CAPER provides annual reporting on performance, including the HOME Program. HUD approved the 2021 (July 2021 ? June 2022) CAPER which indicated the County did not perform inspections during this timeframe due to the COVID 19 pandemic. The 2022 CAPER (July 2022 -June 2023) is currently in the public comment phase to be submitted in September 2023. It includes an update on inspections consistent with the information provided to HUD that the County was still under COVID 19 protocols during almost all of that timeframe and planned to resume inspections in 2023 as was to be included in the 2022 CAPER in conformance with HUD guidance. The County resumed HOME inspections in June 2023 utilizing our standard protocols and controls. Auditor?s Remarks We appreciate the County?s assistance throughout our audit and its planned corrective action to resolving this matter. We performed our audit in accordance with requirements from the Federal agency, the U.S. Department of Housing and Urban Development, which required physical inspections to resume 180 days after December 31, 2021. We reaffirm our finding and will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Memorandum from the U.S. Department of Housing and Urban Development, Additional Revision, and Extension of December 2020 and April 2020 Memorandum ? Availability of Waivers and Suspensions of the HOME Program Requirements in Response to COVID-19 Pandemic. Title 24 CFR Part 92, Home Investment Partnerships Program, section 92.504(d)(1)(iii), Annual inspections, describes the tenant-based rental assistance program requirements for annual inspections. Title 24 CFR Part 92, Home Investment Partnerships Program, sections 92.209(i), 92.251(f), and 92.504(d), Housing Quality Inspection requirements, describe the program specific requirements for performing on-site inspections and determining compliance with quality standards.
2022-002 The County had inadequate internal controls for ensuring compliance with the Housing Quality Standards inspection requirements of its Home Investment Partnerships Program. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2022, the County spent $3,010,680 under the Home Investment Partnerships Program (HOME Program). The objectives of the HOME Program include: (1) Expanding the supply of decent and affordable housing, particularly housing for people with low-and very low-incomes (2) Strengthening the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing (3) Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing (4) Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. These inspections must be completed no less than: ? Every three years for projects containing one to four units ? Every two years for projects containing five to 25 units ? Every year for projects containing 26 or more units However, in response to the COVID-19 pandemic, the U.S. Department of Housing and Urban Development (HUD) issued a waiver of Housing Quality Standards (HQS) inspections. The waiver period spanned from April 10, 2020, to December 31, 2021, and required on-site inspections to resume within 180 days of the end of the waiver period. Our audit found the County did not have adequate internal controls for ensuring compliance with the HOME Program?s HQS requirement to resume on-site inspections when the HUD waiver expired. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition The County was operating under COVID-19 pandemic protocols during the audit period. The state and County rescinded the emergency order on October 31, 2022, and the federal government rescinded the emergency declaration on May 11, 2023. Therefore, during the period under audit, grant administrators were operating with limited in-person contact, and they determined that HQS inspections should be delayed until fiscal year 2023 when all levels of emergency orders were lifted. Effect of Condition The County did not conduct any HQS inspections during fiscal year 2022. As such, the County could not demonstrate that the HOME Program properties it was managing met HQS inspection requirements and were being maintained in a decent, safe and sanitary manner. Recommendation We recommend the County strengthen internal controls to ensure its HOME Program properties meet HQS compliance requirements. Specifically, the County should ensure it performs HQS inspections within the prescribed timeframe. County?s Response The County disagrees that there were inadequate controls. The County has had and does have procedures for conducting physical inspections in conformance with statutory and regulatory guidance and maintains a database for tracking inspections due and completed. Those procedures were suspended as a direct result of the COVID-19 pandemic and associated federal, state, and local directives and guidance. The County has been fully aware of the institution of U.S. Department of Housing and Urban Development (HUD) waiver of the requirement to conduct physical inspections of HOME units as well as their notification that inspections should be resumed. The County communicated with HUD regarding the suspension of HOME inspections during the public health emergency and continuing COVID-19 protocols that impacted the timing for resuming inspections. The County planned for the resumption of inspections and updated those plans based on the COVID-19 emergency and protocols at the federal, state, and local levels which did not align with the end of the HUD waiver nationally. The County and state COVID-19 health emergency did not end until October 31, 2022 and the federal COVID-19 National Public Health emergency did not end until May 11, 2023. The County planned for safely resuming physical inspections at the end of the federal emergency declaration taking into consideration the risk for County staff, agency staff, and tenants to best address the regulatory requirements during this global pandemic. The County communicated with the HUD Seattle Field Office on the planned resumption of HOME unit inspections. In addition to communications with HUD, the information was included in the HUD Consolidated Annual Performance and Evaluation Report (CAPER). The CAPER provides annual reporting on performance, including the HOME Program. HUD approved the 2021 (July 2021 ? June 2022) CAPER which indicated the County did not perform inspections during this timeframe due to the COVID 19 pandemic. The 2022 CAPER (July 2022 -June 2023) is currently in the public comment phase to be submitted in September 2023. It includes an update on inspections consistent with the information provided to HUD that the County was still under COVID 19 protocols during almost all of that timeframe and planned to resume inspections in 2023 as was to be included in the 2022 CAPER in conformance with HUD guidance. The County resumed HOME inspections in June 2023 utilizing our standard protocols and controls. Auditor?s Remarks We appreciate the County?s assistance throughout our audit and its planned corrective action to resolving this matter. We performed our audit in accordance with requirements from the Federal agency, the U.S. Department of Housing and Urban Development, which required physical inspections to resume 180 days after December 31, 2021. We reaffirm our finding and will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Memorandum from the U.S. Department of Housing and Urban Development, Additional Revision, and Extension of December 2020 and April 2020 Memorandum ? Availability of Waivers and Suspensions of the HOME Program Requirements in Response to COVID-19 Pandemic. Title 24 CFR Part 92, Home Investment Partnerships Program, section 92.504(d)(1)(iii), Annual inspections, describes the tenant-based rental assistance program requirements for annual inspections. Title 24 CFR Part 92, Home Investment Partnerships Program, sections 92.209(i), 92.251(f), and 92.504(d), Housing Quality Inspection requirements, describe the program specific requirements for performing on-site inspections and determining compliance with quality standards.
2022-002 The County had inadequate internal controls for ensuring compliance with the Housing Quality Standards inspection requirements of its Home Investment Partnerships Program. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2022, the County spent $3,010,680 under the Home Investment Partnerships Program (HOME Program). The objectives of the HOME Program include: (1) Expanding the supply of decent and affordable housing, particularly housing for people with low-and very low-incomes (2) Strengthening the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing (3) Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing (4) Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. These inspections must be completed no less than: ? Every three years for projects containing one to four units ? Every two years for projects containing five to 25 units ? Every year for projects containing 26 or more units However, in response to the COVID-19 pandemic, the U.S. Department of Housing and Urban Development (HUD) issued a waiver of Housing Quality Standards (HQS) inspections. The waiver period spanned from April 10, 2020, to December 31, 2021, and required on-site inspections to resume within 180 days of the end of the waiver period. Our audit found the County did not have adequate internal controls for ensuring compliance with the HOME Program?s HQS requirement to resume on-site inspections when the HUD waiver expired. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition The County was operating under COVID-19 pandemic protocols during the audit period. The state and County rescinded the emergency order on October 31, 2022, and the federal government rescinded the emergency declaration on May 11, 2023. Therefore, during the period under audit, grant administrators were operating with limited in-person contact, and they determined that HQS inspections should be delayed until fiscal year 2023 when all levels of emergency orders were lifted. Effect of Condition The County did not conduct any HQS inspections during fiscal year 2022. As such, the County could not demonstrate that the HOME Program properties it was managing met HQS inspection requirements and were being maintained in a decent, safe and sanitary manner. Recommendation We recommend the County strengthen internal controls to ensure its HOME Program properties meet HQS compliance requirements. Specifically, the County should ensure it performs HQS inspections within the prescribed timeframe. County?s Response The County disagrees that there were inadequate controls. The County has had and does have procedures for conducting physical inspections in conformance with statutory and regulatory guidance and maintains a database for tracking inspections due and completed. Those procedures were suspended as a direct result of the COVID-19 pandemic and associated federal, state, and local directives and guidance. The County has been fully aware of the institution of U.S. Department of Housing and Urban Development (HUD) waiver of the requirement to conduct physical inspections of HOME units as well as their notification that inspections should be resumed. The County communicated with HUD regarding the suspension of HOME inspections during the public health emergency and continuing COVID-19 protocols that impacted the timing for resuming inspections. The County planned for the resumption of inspections and updated those plans based on the COVID-19 emergency and protocols at the federal, state, and local levels which did not align with the end of the HUD waiver nationally. The County and state COVID-19 health emergency did not end until October 31, 2022 and the federal COVID-19 National Public Health emergency did not end until May 11, 2023. The County planned for safely resuming physical inspections at the end of the federal emergency declaration taking into consideration the risk for County staff, agency staff, and tenants to best address the regulatory requirements during this global pandemic. The County communicated with the HUD Seattle Field Office on the planned resumption of HOME unit inspections. In addition to communications with HUD, the information was included in the HUD Consolidated Annual Performance and Evaluation Report (CAPER). The CAPER provides annual reporting on performance, including the HOME Program. HUD approved the 2021 (July 2021 ? June 2022) CAPER which indicated the County did not perform inspections during this timeframe due to the COVID 19 pandemic. The 2022 CAPER (July 2022 -June 2023) is currently in the public comment phase to be submitted in September 2023. It includes an update on inspections consistent with the information provided to HUD that the County was still under COVID 19 protocols during almost all of that timeframe and planned to resume inspections in 2023 as was to be included in the 2022 CAPER in conformance with HUD guidance. The County resumed HOME inspections in June 2023 utilizing our standard protocols and controls. Auditor?s Remarks We appreciate the County?s assistance throughout our audit and its planned corrective action to resolving this matter. We performed our audit in accordance with requirements from the Federal agency, the U.S. Department of Housing and Urban Development, which required physical inspections to resume 180 days after December 31, 2021. We reaffirm our finding and will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Memorandum from the U.S. Department of Housing and Urban Development, Additional Revision, and Extension of December 2020 and April 2020 Memorandum ? Availability of Waivers and Suspensions of the HOME Program Requirements in Response to COVID-19 Pandemic. Title 24 CFR Part 92, Home Investment Partnerships Program, section 92.504(d)(1)(iii), Annual inspections, describes the tenant-based rental assistance program requirements for annual inspections. Title 24 CFR Part 92, Home Investment Partnerships Program, sections 92.209(i), 92.251(f), and 92.504(d), Housing Quality Inspection requirements, describe the program specific requirements for performing on-site inspections and determining compliance with quality standards.
2022-002 The County had inadequate internal controls for ensuring compliance with the Housing Quality Standards inspection requirements of its Home Investment Partnerships Program. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2022, the County spent $3,010,680 under the Home Investment Partnerships Program (HOME Program). The objectives of the HOME Program include: (1) Expanding the supply of decent and affordable housing, particularly housing for people with low-and very low-incomes (2) Strengthening the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing (3) Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing (4) Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. These inspections must be completed no less than: ? Every three years for projects containing one to four units ? Every two years for projects containing five to 25 units ? Every year for projects containing 26 or more units However, in response to the COVID-19 pandemic, the U.S. Department of Housing and Urban Development (HUD) issued a waiver of Housing Quality Standards (HQS) inspections. The waiver period spanned from April 10, 2020, to December 31, 2021, and required on-site inspections to resume within 180 days of the end of the waiver period. Our audit found the County did not have adequate internal controls for ensuring compliance with the HOME Program?s HQS requirement to resume on-site inspections when the HUD waiver expired. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition The County was operating under COVID-19 pandemic protocols during the audit period. The state and County rescinded the emergency order on October 31, 2022, and the federal government rescinded the emergency declaration on May 11, 2023. Therefore, during the period under audit, grant administrators were operating with limited in-person contact, and they determined that HQS inspections should be delayed until fiscal year 2023 when all levels of emergency orders were lifted. Effect of Condition The County did not conduct any HQS inspections during fiscal year 2022. As such, the County could not demonstrate that the HOME Program properties it was managing met HQS inspection requirements and were being maintained in a decent, safe and sanitary manner. Recommendation We recommend the County strengthen internal controls to ensure its HOME Program properties meet HQS compliance requirements. Specifically, the County should ensure it performs HQS inspections within the prescribed timeframe. County?s Response The County disagrees that there were inadequate controls. The County has had and does have procedures for conducting physical inspections in conformance with statutory and regulatory guidance and maintains a database for tracking inspections due and completed. Those procedures were suspended as a direct result of the COVID-19 pandemic and associated federal, state, and local directives and guidance. The County has been fully aware of the institution of U.S. Department of Housing and Urban Development (HUD) waiver of the requirement to conduct physical inspections of HOME units as well as their notification that inspections should be resumed. The County communicated with HUD regarding the suspension of HOME inspections during the public health emergency and continuing COVID-19 protocols that impacted the timing for resuming inspections. The County planned for the resumption of inspections and updated those plans based on the COVID-19 emergency and protocols at the federal, state, and local levels which did not align with the end of the HUD waiver nationally. The County and state COVID-19 health emergency did not end until October 31, 2022 and the federal COVID-19 National Public Health emergency did not end until May 11, 2023. The County planned for safely resuming physical inspections at the end of the federal emergency declaration taking into consideration the risk for County staff, agency staff, and tenants to best address the regulatory requirements during this global pandemic. The County communicated with the HUD Seattle Field Office on the planned resumption of HOME unit inspections. In addition to communications with HUD, the information was included in the HUD Consolidated Annual Performance and Evaluation Report (CAPER). The CAPER provides annual reporting on performance, including the HOME Program. HUD approved the 2021 (July 2021 ? June 2022) CAPER which indicated the County did not perform inspections during this timeframe due to the COVID 19 pandemic. The 2022 CAPER (July 2022 -June 2023) is currently in the public comment phase to be submitted in September 2023. It includes an update on inspections consistent with the information provided to HUD that the County was still under COVID 19 protocols during almost all of that timeframe and planned to resume inspections in 2023 as was to be included in the 2022 CAPER in conformance with HUD guidance. The County resumed HOME inspections in June 2023 utilizing our standard protocols and controls. Auditor?s Remarks We appreciate the County?s assistance throughout our audit and its planned corrective action to resolving this matter. We performed our audit in accordance with requirements from the Federal agency, the U.S. Department of Housing and Urban Development, which required physical inspections to resume 180 days after December 31, 2021. We reaffirm our finding and will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Memorandum from the U.S. Department of Housing and Urban Development, Additional Revision, and Extension of December 2020 and April 2020 Memorandum ? Availability of Waivers and Suspensions of the HOME Program Requirements in Response to COVID-19 Pandemic. Title 24 CFR Part 92, Home Investment Partnerships Program, section 92.504(d)(1)(iii), Annual inspections, describes the tenant-based rental assistance program requirements for annual inspections. Title 24 CFR Part 92, Home Investment Partnerships Program, sections 92.209(i), 92.251(f), and 92.504(d), Housing Quality Inspection requirements, describe the program specific requirements for performing on-site inspections and determining compliance with quality standards.
2022-002 The County had inadequate internal controls for ensuring compliance with the Housing Quality Standards inspection requirements of its Home Investment Partnerships Program. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2022, the County spent $3,010,680 under the Home Investment Partnerships Program (HOME Program). The objectives of the HOME Program include: (1) Expanding the supply of decent and affordable housing, particularly housing for people with low-and very low-incomes (2) Strengthening the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing (3) Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing (4) Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. These inspections must be completed no less than: ? Every three years for projects containing one to four units ? Every two years for projects containing five to 25 units ? Every year for projects containing 26 or more units However, in response to the COVID-19 pandemic, the U.S. Department of Housing and Urban Development (HUD) issued a waiver of Housing Quality Standards (HQS) inspections. The waiver period spanned from April 10, 2020, to December 31, 2021, and required on-site inspections to resume within 180 days of the end of the waiver period. Our audit found the County did not have adequate internal controls for ensuring compliance with the HOME Program?s HQS requirement to resume on-site inspections when the HUD waiver expired. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition The County was operating under COVID-19 pandemic protocols during the audit period. The state and County rescinded the emergency order on October 31, 2022, and the federal government rescinded the emergency declaration on May 11, 2023. Therefore, during the period under audit, grant administrators were operating with limited in-person contact, and they determined that HQS inspections should be delayed until fiscal year 2023 when all levels of emergency orders were lifted. Effect of Condition The County did not conduct any HQS inspections during fiscal year 2022. As such, the County could not demonstrate that the HOME Program properties it was managing met HQS inspection requirements and were being maintained in a decent, safe and sanitary manner. Recommendation We recommend the County strengthen internal controls to ensure its HOME Program properties meet HQS compliance requirements. Specifically, the County should ensure it performs HQS inspections within the prescribed timeframe. County?s Response The County disagrees that there were inadequate controls. The County has had and does have procedures for conducting physical inspections in conformance with statutory and regulatory guidance and maintains a database for tracking inspections due and completed. Those procedures were suspended as a direct result of the COVID-19 pandemic and associated federal, state, and local directives and guidance. The County has been fully aware of the institution of U.S. Department of Housing and Urban Development (HUD) waiver of the requirement to conduct physical inspections of HOME units as well as their notification that inspections should be resumed. The County communicated with HUD regarding the suspension of HOME inspections during the public health emergency and continuing COVID-19 protocols that impacted the timing for resuming inspections. The County planned for the resumption of inspections and updated those plans based on the COVID-19 emergency and protocols at the federal, state, and local levels which did not align with the end of the HUD waiver nationally. The County and state COVID-19 health emergency did not end until October 31, 2022 and the federal COVID-19 National Public Health emergency did not end until May 11, 2023. The County planned for safely resuming physical inspections at the end of the federal emergency declaration taking into consideration the risk for County staff, agency staff, and tenants to best address the regulatory requirements during this global pandemic. The County communicated with the HUD Seattle Field Office on the planned resumption of HOME unit inspections. In addition to communications with HUD, the information was included in the HUD Consolidated Annual Performance and Evaluation Report (CAPER). The CAPER provides annual reporting on performance, including the HOME Program. HUD approved the 2021 (July 2021 ? June 2022) CAPER which indicated the County did not perform inspections during this timeframe due to the COVID 19 pandemic. The 2022 CAPER (July 2022 -June 2023) is currently in the public comment phase to be submitted in September 2023. It includes an update on inspections consistent with the information provided to HUD that the County was still under COVID 19 protocols during almost all of that timeframe and planned to resume inspections in 2023 as was to be included in the 2022 CAPER in conformance with HUD guidance. The County resumed HOME inspections in June 2023 utilizing our standard protocols and controls. Auditor?s Remarks We appreciate the County?s assistance throughout our audit and its planned corrective action to resolving this matter. We performed our audit in accordance with requirements from the Federal agency, the U.S. Department of Housing and Urban Development, which required physical inspections to resume 180 days after December 31, 2021. We reaffirm our finding and will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Memorandum from the U.S. Department of Housing and Urban Development, Additional Revision, and Extension of December 2020 and April 2020 Memorandum ? Availability of Waivers and Suspensions of the HOME Program Requirements in Response to COVID-19 Pandemic. Title 24 CFR Part 92, Home Investment Partnerships Program, section 92.504(d)(1)(iii), Annual inspections, describes the tenant-based rental assistance program requirements for annual inspections. Title 24 CFR Part 92, Home Investment Partnerships Program, sections 92.209(i), 92.251(f), and 92.504(d), Housing Quality Inspection requirements, describe the program specific requirements for performing on-site inspections and determining compliance with quality standards.
2022-002 The County had inadequate internal controls for ensuring compliance with the Housing Quality Standards inspection requirements of its Home Investment Partnerships Program. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2022, the County spent $3,010,680 under the Home Investment Partnerships Program (HOME Program). The objectives of the HOME Program include: (1) Expanding the supply of decent and affordable housing, particularly housing for people with low-and very low-incomes (2) Strengthening the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing (3) Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing (4) Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. These inspections must be completed no less than: ? Every three years for projects containing one to four units ? Every two years for projects containing five to 25 units ? Every year for projects containing 26 or more units However, in response to the COVID-19 pandemic, the U.S. Department of Housing and Urban Development (HUD) issued a waiver of Housing Quality Standards (HQS) inspections. The waiver period spanned from April 10, 2020, to December 31, 2021, and required on-site inspections to resume within 180 days of the end of the waiver period. Our audit found the County did not have adequate internal controls for ensuring compliance with the HOME Program?s HQS requirement to resume on-site inspections when the HUD waiver expired. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition The County was operating under COVID-19 pandemic protocols during the audit period. The state and County rescinded the emergency order on October 31, 2022, and the federal government rescinded the emergency declaration on May 11, 2023. Therefore, during the period under audit, grant administrators were operating with limited in-person contact, and they determined that HQS inspections should be delayed until fiscal year 2023 when all levels of emergency orders were lifted. Effect of Condition The County did not conduct any HQS inspections during fiscal year 2022. As such, the County could not demonstrate that the HOME Program properties it was managing met HQS inspection requirements and were being maintained in a decent, safe and sanitary manner. Recommendation We recommend the County strengthen internal controls to ensure its HOME Program properties meet HQS compliance requirements. Specifically, the County should ensure it performs HQS inspections within the prescribed timeframe. County?s Response The County disagrees that there were inadequate controls. The County has had and does have procedures for conducting physical inspections in conformance with statutory and regulatory guidance and maintains a database for tracking inspections due and completed. Those procedures were suspended as a direct result of the COVID-19 pandemic and associated federal, state, and local directives and guidance. The County has been fully aware of the institution of U.S. Department of Housing and Urban Development (HUD) waiver of the requirement to conduct physical inspections of HOME units as well as their notification that inspections should be resumed. The County communicated with HUD regarding the suspension of HOME inspections during the public health emergency and continuing COVID-19 protocols that impacted the timing for resuming inspections. The County planned for the resumption of inspections and updated those plans based on the COVID-19 emergency and protocols at the federal, state, and local levels which did not align with the end of the HUD waiver nationally. The County and state COVID-19 health emergency did not end until October 31, 2022 and the federal COVID-19 National Public Health emergency did not end until May 11, 2023. The County planned for safely resuming physical inspections at the end of the federal emergency declaration taking into consideration the risk for County staff, agency staff, and tenants to best address the regulatory requirements during this global pandemic. The County communicated with the HUD Seattle Field Office on the planned resumption of HOME unit inspections. In addition to communications with HUD, the information was included in the HUD Consolidated Annual Performance and Evaluation Report (CAPER). The CAPER provides annual reporting on performance, including the HOME Program. HUD approved the 2021 (July 2021 ? June 2022) CAPER which indicated the County did not perform inspections during this timeframe due to the COVID 19 pandemic. The 2022 CAPER (July 2022 -June 2023) is currently in the public comment phase to be submitted in September 2023. It includes an update on inspections consistent with the information provided to HUD that the County was still under COVID 19 protocols during almost all of that timeframe and planned to resume inspections in 2023 as was to be included in the 2022 CAPER in conformance with HUD guidance. The County resumed HOME inspections in June 2023 utilizing our standard protocols and controls. Auditor?s Remarks We appreciate the County?s assistance throughout our audit and its planned corrective action to resolving this matter. We performed our audit in accordance with requirements from the Federal agency, the U.S. Department of Housing and Urban Development, which required physical inspections to resume 180 days after December 31, 2021. We reaffirm our finding and will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Memorandum from the U.S. Department of Housing and Urban Development, Additional Revision, and Extension of December 2020 and April 2020 Memorandum ? Availability of Waivers and Suspensions of the HOME Program Requirements in Response to COVID-19 Pandemic. Title 24 CFR Part 92, Home Investment Partnerships Program, section 92.504(d)(1)(iii), Annual inspections, describes the tenant-based rental assistance program requirements for annual inspections. Title 24 CFR Part 92, Home Investment Partnerships Program, sections 92.209(i), 92.251(f), and 92.504(d), Housing Quality Inspection requirements, describe the program specific requirements for performing on-site inspections and determining compliance with quality standards.
2022-003 The County did not have adequate internal controls for ensuring federal match contributions from subrecipients were adequately supported. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Background The Continuum of Care (CoC) program is designed to promote community-wide commitment to the goal of ending homelessness. The program provides funding to quickly rehouse homeless people and families while minimizing the trauma and dislocation homelessness causes, promote access to and effective use of mainstream programs by homeless people and families, and optimize self-sufficiency among people and families experiencing homelessness. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established internal controls. Federal regulations also require that match contributions be adequately documented and come from allowable expenditures meeting federal cost principles. The CoC program requires recipients and subrecipients to provide nonfederal matching funds of 25 percent of their total federal expenditures. The County provided this match through its own funds and funds provided by its subrecipients. For the program year ending on June 30, 2022, the County and its subrecipients were required to provide a total match of $2,714,574. As the prime recipient, the County is responsible for monitoring the activities of the subrecipients to ensure they comply with federal regulations, including that subrecipient match contributions are adequately documented. Description of Condition The County?s controls were inadequate for ensuring it reviewed and retained subrecipient match contribution documentation to gain assurance that match costs came from allowable sources. The County contractually requires subrecipients to provide documentation of match contributions monthly, but it only enforces this requirement for the first and last month of each program year. In addition, the County?s subrecipient monitoring procedures state that it samples the remaining program months and reviews match documentation, but staff did not perform this process for fiscal year 2022. We consider these deficiencies in internal controls to be a material weakness. Cause of Condition Employees responsible for administering the program determined the review of the first and last month of match documentation of each program year, along with the review performed as part of subrecipient monitoring, would be sufficient to ensure match amounts were adequately supported and came from allowable sources. However, in April 2022, the County experienced turnover in the position responsible for performing subrecipient monitoring reviews over documentation of match contributions, and this position remained vacant for more than a year. As a result, a key part of the process for reviewing a sample of match documentation throughout the year was not performed during the audit period. Effect of Condition During fiscal year 2022, the County provided a total match of $4,432,463. Although this amount in total exceeded the required match of $2,714,574, the County did not review and obtain adequate documentation of subrecipient match contributions totaling $3,536,545, or 79.8 percent of total match contributions. Without adequate documentation to support subrecipient match contributions, the County is not in compliance with the granting agency?s recordkeeping requirements. Further, the County cannot assure federal grantors that matching contributions reported are accurate and valid. In addition, unsupported match contributions could result in a reduction of future federal awards. During the audit, the County obtained additional documentation from subrecipients to support match contributions. This reduced the amount of unsupported subrecipient match contributions to $896,966, or 20.2 percent of total match contributions. As the County initially provided match contributions that were more than the amount required, the remaining supported amount met the overall match requirements. As such, we are not questioning costs. Recommendation We recommend the County strengthen internal controls over federal match contributions from subrecipients to ensure it reviews and retains adequate documentation of the source and allowability of the match. County?s Response The County does have established internal controls for matching requirements. These controls include remote review of Program Income and Match Reports (summary, GL for cash match, in-kind summary sheet), first and last month review of source documentation, additional requests for backup documentation if concerns are identified, monthly staff review of match report sheet breaking down reported match amounts by eligible category for each agency providing in-kind match, and onsite review of match source documentation for selected months other than first/last month. The County?s contract language for agencies to provide the match documentation was further detailed in a memo to CoC agencies. The memo identified the types of documentation agencies are to submit, and that the agencies are not expected to provide all source documentation on months 2-11. The County wrote the contract language to generally require match documentation monthly and implemented its intent specifically through the memo. CFR part 578.73 requires the recipient or subrecipient to document and maintain match documentation. The County as recipient and CoC subrecipients maintained source documentation. One of the agencies for which supporting documentation was requested during the audit, did not have adequate time to provide the documentation, as the agency had moved offices and most of the support documentation had not been unboxed. Another factor was some of the support documentation contains HIPAA-covered personal identifiable information (PII) that needs to be handled and maintain under strict confidential requirements. This would require additional time to redact PII to maintain confidentiality. The agency was able to provide most but not all of the support documentation by the deadline under these statutory restrictions. While we do have established internal controls, the County was unable to perform onsite match monitoring during 2022 due to staff turnover and Covid-19 restrictions. Labor market conditions during 2022 were extremely challenging, and as a result it took a considerable amount of time to fill the Housing and Community Services Financial Compliance Officer 1 (FCO1) position. The FCO1 performs remote and onsite monitoring activities for cash and in-kind match and works closely with program staff and fiscal staff. The position was filled with onboarding and training occurring in the later part of 2022 and first part of 2023. Onsite and remote FCO1 match monitoring resumed in 2023 and the FCO1 will review current practices to recommend possible improvements for implementation. Auditor?s Remarks We appreciate the County?s commitment to resolve this finding and thank the County for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 306, Cost sharing or matching, describes the requirements for match contributions to be allowable under federal cost principles. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the requirements for federal expenditures to be adequately documented. Title 24 CFR Part 578, Continuum of Care Program, section 103, Recordkeeping requirements, describes the requirements for recipients to keep records of the source and use of match contributions.
2022-003 The County did not have adequate internal controls for ensuring federal match contributions from subrecipients were adequately supported. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Background The Continuum of Care (CoC) program is designed to promote community-wide commitment to the goal of ending homelessness. The program provides funding to quickly rehouse homeless people and families while minimizing the trauma and dislocation homelessness causes, promote access to and effective use of mainstream programs by homeless people and families, and optimize self-sufficiency among people and families experiencing homelessness. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established internal controls. Federal regulations also require that match contributions be adequately documented and come from allowable expenditures meeting federal cost principles. The CoC program requires recipients and subrecipients to provide nonfederal matching funds of 25 percent of their total federal expenditures. The County provided this match through its own funds and funds provided by its subrecipients. For the program year ending on June 30, 2022, the County and its subrecipients were required to provide a total match of $2,714,574. As the prime recipient, the County is responsible for monitoring the activities of the subrecipients to ensure they comply with federal regulations, including that subrecipient match contributions are adequately documented. Description of Condition The County?s controls were inadequate for ensuring it reviewed and retained subrecipient match contribution documentation to gain assurance that match costs came from allowable sources. The County contractually requires subrecipients to provide documentation of match contributions monthly, but it only enforces this requirement for the first and last month of each program year. In addition, the County?s subrecipient monitoring procedures state that it samples the remaining program months and reviews match documentation, but staff did not perform this process for fiscal year 2022. We consider these deficiencies in internal controls to be a material weakness. Cause of Condition Employees responsible for administering the program determined the review of the first and last month of match documentation of each program year, along with the review performed as part of subrecipient monitoring, would be sufficient to ensure match amounts were adequately supported and came from allowable sources. However, in April 2022, the County experienced turnover in the position responsible for performing subrecipient monitoring reviews over documentation of match contributions, and this position remained vacant for more than a year. As a result, a key part of the process for reviewing a sample of match documentation throughout the year was not performed during the audit period. Effect of Condition During fiscal year 2022, the County provided a total match of $4,432,463. Although this amount in total exceeded the required match of $2,714,574, the County did not review and obtain adequate documentation of subrecipient match contributions totaling $3,536,545, or 79.8 percent of total match contributions. Without adequate documentation to support subrecipient match contributions, the County is not in compliance with the granting agency?s recordkeeping requirements. Further, the County cannot assure federal grantors that matching contributions reported are accurate and valid. In addition, unsupported match contributions could result in a reduction of future federal awards. During the audit, the County obtained additional documentation from subrecipients to support match contributions. This reduced the amount of unsupported subrecipient match contributions to $896,966, or 20.2 percent of total match contributions. As the County initially provided match contributions that were more than the amount required, the remaining supported amount met the overall match requirements. As such, we are not questioning costs. Recommendation We recommend the County strengthen internal controls over federal match contributions from subrecipients to ensure it reviews and retains adequate documentation of the source and allowability of the match. County?s Response The County does have established internal controls for matching requirements. These controls include remote review of Program Income and Match Reports (summary, GL for cash match, in-kind summary sheet), first and last month review of source documentation, additional requests for backup documentation if concerns are identified, monthly staff review of match report sheet breaking down reported match amounts by eligible category for each agency providing in-kind match, and onsite review of match source documentation for selected months other than first/last month. The County?s contract language for agencies to provide the match documentation was further detailed in a memo to CoC agencies. The memo identified the types of documentation agencies are to submit, and that the agencies are not expected to provide all source documentation on months 2-11. The County wrote the contract language to generally require match documentation monthly and implemented its intent specifically through the memo. CFR part 578.73 requires the recipient or subrecipient to document and maintain match documentation. The County as recipient and CoC subrecipients maintained source documentation. One of the agencies for which supporting documentation was requested during the audit, did not have adequate time to provide the documentation, as the agency had moved offices and most of the support documentation had not been unboxed. Another factor was some of the support documentation contains HIPAA-covered personal identifiable information (PII) that needs to be handled and maintain under strict confidential requirements. This would require additional time to redact PII to maintain confidentiality. The agency was able to provide most but not all of the support documentation by the deadline under these statutory restrictions. While we do have established internal controls, the County was unable to perform onsite match monitoring during 2022 due to staff turnover and Covid-19 restrictions. Labor market conditions during 2022 were extremely challenging, and as a result it took a considerable amount of time to fill the Housing and Community Services Financial Compliance Officer 1 (FCO1) position. The FCO1 performs remote and onsite monitoring activities for cash and in-kind match and works closely with program staff and fiscal staff. The position was filled with onboarding and training occurring in the later part of 2022 and first part of 2023. Onsite and remote FCO1 match monitoring resumed in 2023 and the FCO1 will review current practices to recommend possible improvements for implementation. Auditor?s Remarks We appreciate the County?s commitment to resolve this finding and thank the County for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 306, Cost sharing or matching, describes the requirements for match contributions to be allowable under federal cost principles. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the requirements for federal expenditures to be adequately documented. Title 24 CFR Part 578, Continuum of Care Program, section 103, Recordkeeping requirements, describes the requirements for recipients to keep records of the source and use of match contributions.
2022-003 The County did not have adequate internal controls for ensuring federal match contributions from subrecipients were adequately supported. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Background The Continuum of Care (CoC) program is designed to promote community-wide commitment to the goal of ending homelessness. The program provides funding to quickly rehouse homeless people and families while minimizing the trauma and dislocation homelessness causes, promote access to and effective use of mainstream programs by homeless people and families, and optimize self-sufficiency among people and families experiencing homelessness. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established internal controls. Federal regulations also require that match contributions be adequately documented and come from allowable expenditures meeting federal cost principles. The CoC program requires recipients and subrecipients to provide nonfederal matching funds of 25 percent of their total federal expenditures. The County provided this match through its own funds and funds provided by its subrecipients. For the program year ending on June 30, 2022, the County and its subrecipients were required to provide a total match of $2,714,574. As the prime recipient, the County is responsible for monitoring the activities of the subrecipients to ensure they comply with federal regulations, including that subrecipient match contributions are adequately documented. Description of Condition The County?s controls were inadequate for ensuring it reviewed and retained subrecipient match contribution documentation to gain assurance that match costs came from allowable sources. The County contractually requires subrecipients to provide documentation of match contributions monthly, but it only enforces this requirement for the first and last month of each program year. In addition, the County?s subrecipient monitoring procedures state that it samples the remaining program months and reviews match documentation, but staff did not perform this process for fiscal year 2022. We consider these deficiencies in internal controls to be a material weakness. Cause of Condition Employees responsible for administering the program determined the review of the first and last month of match documentation of each program year, along with the review performed as part of subrecipient monitoring, would be sufficient to ensure match amounts were adequately supported and came from allowable sources. However, in April 2022, the County experienced turnover in the position responsible for performing subrecipient monitoring reviews over documentation of match contributions, and this position remained vacant for more than a year. As a result, a key part of the process for reviewing a sample of match documentation throughout the year was not performed during the audit period. Effect of Condition During fiscal year 2022, the County provided a total match of $4,432,463. Although this amount in total exceeded the required match of $2,714,574, the County did not review and obtain adequate documentation of subrecipient match contributions totaling $3,536,545, or 79.8 percent of total match contributions. Without adequate documentation to support subrecipient match contributions, the County is not in compliance with the granting agency?s recordkeeping requirements. Further, the County cannot assure federal grantors that matching contributions reported are accurate and valid. In addition, unsupported match contributions could result in a reduction of future federal awards. During the audit, the County obtained additional documentation from subrecipients to support match contributions. This reduced the amount of unsupported subrecipient match contributions to $896,966, or 20.2 percent of total match contributions. As the County initially provided match contributions that were more than the amount required, the remaining supported amount met the overall match requirements. As such, we are not questioning costs. Recommendation We recommend the County strengthen internal controls over federal match contributions from subrecipients to ensure it reviews and retains adequate documentation of the source and allowability of the match. County?s Response The County does have established internal controls for matching requirements. These controls include remote review of Program Income and Match Reports (summary, GL for cash match, in-kind summary sheet), first and last month review of source documentation, additional requests for backup documentation if concerns are identified, monthly staff review of match report sheet breaking down reported match amounts by eligible category for each agency providing in-kind match, and onsite review of match source documentation for selected months other than first/last month. The County?s contract language for agencies to provide the match documentation was further detailed in a memo to CoC agencies. The memo identified the types of documentation agencies are to submit, and that the agencies are not expected to provide all source documentation on months 2-11. The County wrote the contract language to generally require match documentation monthly and implemented its intent specifically through the memo. CFR part 578.73 requires the recipient or subrecipient to document and maintain match documentation. The County as recipient and CoC subrecipients maintained source documentation. One of the agencies for which supporting documentation was requested during the audit, did not have adequate time to provide the documentation, as the agency had moved offices and most of the support documentation had not been unboxed. Another factor was some of the support documentation contains HIPAA-covered personal identifiable information (PII) that needs to be handled and maintain under strict confidential requirements. This would require additional time to redact PII to maintain confidentiality. The agency was able to provide most but not all of the support documentation by the deadline under these statutory restrictions. While we do have established internal controls, the County was unable to perform onsite match monitoring during 2022 due to staff turnover and Covid-19 restrictions. Labor market conditions during 2022 were extremely challenging, and as a result it took a considerable amount of time to fill the Housing and Community Services Financial Compliance Officer 1 (FCO1) position. The FCO1 performs remote and onsite monitoring activities for cash and in-kind match and works closely with program staff and fiscal staff. The position was filled with onboarding and training occurring in the later part of 2022 and first part of 2023. Onsite and remote FCO1 match monitoring resumed in 2023 and the FCO1 will review current practices to recommend possible improvements for implementation. Auditor?s Remarks We appreciate the County?s commitment to resolve this finding and thank the County for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 306, Cost sharing or matching, describes the requirements for match contributions to be allowable under federal cost principles. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the requirements for federal expenditures to be adequately documented. Title 24 CFR Part 578, Continuum of Care Program, section 103, Recordkeeping requirements, describes the requirements for recipients to keep records of the source and use of match contributions.
2022-003 The County did not have adequate internal controls for ensuring federal match contributions from subrecipients were adequately supported. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Background The Continuum of Care (CoC) program is designed to promote community-wide commitment to the goal of ending homelessness. The program provides funding to quickly rehouse homeless people and families while minimizing the trauma and dislocation homelessness causes, promote access to and effective use of mainstream programs by homeless people and families, and optimize self-sufficiency among people and families experiencing homelessness. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established internal controls. Federal regulations also require that match contributions be adequately documented and come from allowable expenditures meeting federal cost principles. The CoC program requires recipients and subrecipients to provide nonfederal matching funds of 25 percent of their total federal expenditures. The County provided this match through its own funds and funds provided by its subrecipients. For the program year ending on June 30, 2022, the County and its subrecipients were required to provide a total match of $2,714,574. As the prime recipient, the County is responsible for monitoring the activities of the subrecipients to ensure they comply with federal regulations, including that subrecipient match contributions are adequately documented. Description of Condition The County?s controls were inadequate for ensuring it reviewed and retained subrecipient match contribution documentation to gain assurance that match costs came from allowable sources. The County contractually requires subrecipients to provide documentation of match contributions monthly, but it only enforces this requirement for the first and last month of each program year. In addition, the County?s subrecipient monitoring procedures state that it samples the remaining program months and reviews match documentation, but staff did not perform this process for fiscal year 2022. We consider these deficiencies in internal controls to be a material weakness. Cause of Condition Employees responsible for administering the program determined the review of the first and last month of match documentation of each program year, along with the review performed as part of subrecipient monitoring, would be sufficient to ensure match amounts were adequately supported and came from allowable sources. However, in April 2022, the County experienced turnover in the position responsible for performing subrecipient monitoring reviews over documentation of match contributions, and this position remained vacant for more than a year. As a result, a key part of the process for reviewing a sample of match documentation throughout the year was not performed during the audit period. Effect of Condition During fiscal year 2022, the County provided a total match of $4,432,463. Although this amount in total exceeded the required match of $2,714,574, the County did not review and obtain adequate documentation of subrecipient match contributions totaling $3,536,545, or 79.8 percent of total match contributions. Without adequate documentation to support subrecipient match contributions, the County is not in compliance with the granting agency?s recordkeeping requirements. Further, the County cannot assure federal grantors that matching contributions reported are accurate and valid. In addition, unsupported match contributions could result in a reduction of future federal awards. During the audit, the County obtained additional documentation from subrecipients to support match contributions. This reduced the amount of unsupported subrecipient match contributions to $896,966, or 20.2 percent of total match contributions. As the County initially provided match contributions that were more than the amount required, the remaining supported amount met the overall match requirements. As such, we are not questioning costs. Recommendation We recommend the County strengthen internal controls over federal match contributions from subrecipients to ensure it reviews and retains adequate documentation of the source and allowability of the match. County?s Response The County does have established internal controls for matching requirements. These controls include remote review of Program Income and Match Reports (summary, GL for cash match, in-kind summary sheet), first and last month review of source documentation, additional requests for backup documentation if concerns are identified, monthly staff review of match report sheet breaking down reported match amounts by eligible category for each agency providing in-kind match, and onsite review of match source documentation for selected months other than first/last month. The County?s contract language for agencies to provide the match documentation was further detailed in a memo to CoC agencies. The memo identified the types of documentation agencies are to submit, and that the agencies are not expected to provide all source documentation on months 2-11. The County wrote the contract language to generally require match documentation monthly and implemented its intent specifically through the memo. CFR part 578.73 requires the recipient or subrecipient to document and maintain match documentation. The County as recipient and CoC subrecipients maintained source documentation. One of the agencies for which supporting documentation was requested during the audit, did not have adequate time to provide the documentation, as the agency had moved offices and most of the support documentation had not been unboxed. Another factor was some of the support documentation contains HIPAA-covered personal identifiable information (PII) that needs to be handled and maintain under strict confidential requirements. This would require additional time to redact PII to maintain confidentiality. The agency was able to provide most but not all of the support documentation by the deadline under these statutory restrictions. While we do have established internal controls, the County was unable to perform onsite match monitoring during 2022 due to staff turnover and Covid-19 restrictions. Labor market conditions during 2022 were extremely challenging, and as a result it took a considerable amount of time to fill the Housing and Community Services Financial Compliance Officer 1 (FCO1) position. The FCO1 performs remote and onsite monitoring activities for cash and in-kind match and works closely with program staff and fiscal staff. The position was filled with onboarding and training occurring in the later part of 2022 and first part of 2023. Onsite and remote FCO1 match monitoring resumed in 2023 and the FCO1 will review current practices to recommend possible improvements for implementation. Auditor?s Remarks We appreciate the County?s commitment to resolve this finding and thank the County for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 306, Cost sharing or matching, describes the requirements for match contributions to be allowable under federal cost principles. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the requirements for federal expenditures to be adequately documented. Title 24 CFR Part 578, Continuum of Care Program, section 103, Recordkeeping requirements, describes the requirements for recipients to keep records of the source and use of match contributions.
2022-002 The County had inadequate internal controls for ensuring compliance with the Housing Quality Standards inspection requirements of its Home Investment Partnerships Program. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2022, the County spent $3,010,680 under the Home Investment Partnerships Program (HOME Program). The objectives of the HOME Program include: (1) Expanding the supply of decent and affordable housing, particularly housing for people with low-and very low-incomes (2) Strengthening the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing (3) Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing (4) Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. These inspections must be completed no less than: ? Every three years for projects containing one to four units ? Every two years for projects containing five to 25 units ? Every year for projects containing 26 or more units However, in response to the COVID-19 pandemic, the U.S. Department of Housing and Urban Development (HUD) issued a waiver of Housing Quality Standards (HQS) inspections. The waiver period spanned from April 10, 2020, to December 31, 2021, and required on-site inspections to resume within 180 days of the end of the waiver period. Our audit found the County did not have adequate internal controls for ensuring compliance with the HOME Program?s HQS requirement to resume on-site inspections when the HUD waiver expired. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition The County was operating under COVID-19 pandemic protocols during the audit period. The state and County rescinded the emergency order on October 31, 2022, and the federal government rescinded the emergency declaration on May 11, 2023. Therefore, during the period under audit, grant administrators were operating with limited in-person contact, and they determined that HQS inspections should be delayed until fiscal year 2023 when all levels of emergency orders were lifted. Effect of Condition The County did not conduct any HQS inspections during fiscal year 2022. As such, the County could not demonstrate that the HOME Program properties it was managing met HQS inspection requirements and were being maintained in a decent, safe and sanitary manner. Recommendation We recommend the County strengthen internal controls to ensure its HOME Program properties meet HQS compliance requirements. Specifically, the County should ensure it performs HQS inspections within the prescribed timeframe. County?s Response The County disagrees that there were inadequate controls. The County has had and does have procedures for conducting physical inspections in conformance with statutory and regulatory guidance and maintains a database for tracking inspections due and completed. Those procedures were suspended as a direct result of the COVID-19 pandemic and associated federal, state, and local directives and guidance. The County has been fully aware of the institution of U.S. Department of Housing and Urban Development (HUD) waiver of the requirement to conduct physical inspections of HOME units as well as their notification that inspections should be resumed. The County communicated with HUD regarding the suspension of HOME inspections during the public health emergency and continuing COVID-19 protocols that impacted the timing for resuming inspections. The County planned for the resumption of inspections and updated those plans based on the COVID-19 emergency and protocols at the federal, state, and local levels which did not align with the end of the HUD waiver nationally. The County and state COVID-19 health emergency did not end until October 31, 2022 and the federal COVID-19 National Public Health emergency did not end until May 11, 2023. The County planned for safely resuming physical inspections at the end of the federal emergency declaration taking into consideration the risk for County staff, agency staff, and tenants to best address the regulatory requirements during this global pandemic. The County communicated with the HUD Seattle Field Office on the planned resumption of HOME unit inspections. In addition to communications with HUD, the information was included in the HUD Consolidated Annual Performance and Evaluation Report (CAPER). The CAPER provides annual reporting on performance, including the HOME Program. HUD approved the 2021 (July 2021 ? June 2022) CAPER which indicated the County did not perform inspections during this timeframe due to the COVID 19 pandemic. The 2022 CAPER (July 2022 -June 2023) is currently in the public comment phase to be submitted in September 2023. It includes an update on inspections consistent with the information provided to HUD that the County was still under COVID 19 protocols during almost all of that timeframe and planned to resume inspections in 2023 as was to be included in the 2022 CAPER in conformance with HUD guidance. The County resumed HOME inspections in June 2023 utilizing our standard protocols and controls. Auditor?s Remarks We appreciate the County?s assistance throughout our audit and its planned corrective action to resolving this matter. We performed our audit in accordance with requirements from the Federal agency, the U.S. Department of Housing and Urban Development, which required physical inspections to resume 180 days after December 31, 2021. We reaffirm our finding and will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Memorandum from the U.S. Department of Housing and Urban Development, Additional Revision, and Extension of December 2020 and April 2020 Memorandum ? Availability of Waivers and Suspensions of the HOME Program Requirements in Response to COVID-19 Pandemic. Title 24 CFR Part 92, Home Investment Partnerships Program, section 92.504(d)(1)(iii), Annual inspections, describes the tenant-based rental assistance program requirements for annual inspections. Title 24 CFR Part 92, Home Investment Partnerships Program, sections 92.209(i), 92.251(f), and 92.504(d), Housing Quality Inspection requirements, describe the program specific requirements for performing on-site inspections and determining compliance with quality standards.
2022-002 The County had inadequate internal controls for ensuring compliance with the Housing Quality Standards inspection requirements of its Home Investment Partnerships Program. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2022, the County spent $3,010,680 under the Home Investment Partnerships Program (HOME Program). The objectives of the HOME Program include: (1) Expanding the supply of decent and affordable housing, particularly housing for people with low-and very low-incomes (2) Strengthening the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing (3) Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing (4) Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. These inspections must be completed no less than: ? Every three years for projects containing one to four units ? Every two years for projects containing five to 25 units ? Every year for projects containing 26 or more units However, in response to the COVID-19 pandemic, the U.S. Department of Housing and Urban Development (HUD) issued a waiver of Housing Quality Standards (HQS) inspections. The waiver period spanned from April 10, 2020, to December 31, 2021, and required on-site inspections to resume within 180 days of the end of the waiver period. Our audit found the County did not have adequate internal controls for ensuring compliance with the HOME Program?s HQS requirement to resume on-site inspections when the HUD waiver expired. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition The County was operating under COVID-19 pandemic protocols during the audit period. The state and County rescinded the emergency order on October 31, 2022, and the federal government rescinded the emergency declaration on May 11, 2023. Therefore, during the period under audit, grant administrators were operating with limited in-person contact, and they determined that HQS inspections should be delayed until fiscal year 2023 when all levels of emergency orders were lifted. Effect of Condition The County did not conduct any HQS inspections during fiscal year 2022. As such, the County could not demonstrate that the HOME Program properties it was managing met HQS inspection requirements and were being maintained in a decent, safe and sanitary manner. Recommendation We recommend the County strengthen internal controls to ensure its HOME Program properties meet HQS compliance requirements. Specifically, the County should ensure it performs HQS inspections within the prescribed timeframe. County?s Response The County disagrees that there were inadequate controls. The County has had and does have procedures for conducting physical inspections in conformance with statutory and regulatory guidance and maintains a database for tracking inspections due and completed. Those procedures were suspended as a direct result of the COVID-19 pandemic and associated federal, state, and local directives and guidance. The County has been fully aware of the institution of U.S. Department of Housing and Urban Development (HUD) waiver of the requirement to conduct physical inspections of HOME units as well as their notification that inspections should be resumed. The County communicated with HUD regarding the suspension of HOME inspections during the public health emergency and continuing COVID-19 protocols that impacted the timing for resuming inspections. The County planned for the resumption of inspections and updated those plans based on the COVID-19 emergency and protocols at the federal, state, and local levels which did not align with the end of the HUD waiver nationally. The County and state COVID-19 health emergency did not end until October 31, 2022 and the federal COVID-19 National Public Health emergency did not end until May 11, 2023. The County planned for safely resuming physical inspections at the end of the federal emergency declaration taking into consideration the risk for County staff, agency staff, and tenants to best address the regulatory requirements during this global pandemic. The County communicated with the HUD Seattle Field Office on the planned resumption of HOME unit inspections. In addition to communications with HUD, the information was included in the HUD Consolidated Annual Performance and Evaluation Report (CAPER). The CAPER provides annual reporting on performance, including the HOME Program. HUD approved the 2021 (July 2021 ? June 2022) CAPER which indicated the County did not perform inspections during this timeframe due to the COVID 19 pandemic. The 2022 CAPER (July 2022 -June 2023) is currently in the public comment phase to be submitted in September 2023. It includes an update on inspections consistent with the information provided to HUD that the County was still under COVID 19 protocols during almost all of that timeframe and planned to resume inspections in 2023 as was to be included in the 2022 CAPER in conformance with HUD guidance. The County resumed HOME inspections in June 2023 utilizing our standard protocols and controls. Auditor?s Remarks We appreciate the County?s assistance throughout our audit and its planned corrective action to resolving this matter. We performed our audit in accordance with requirements from the Federal agency, the U.S. Department of Housing and Urban Development, which required physical inspections to resume 180 days after December 31, 2021. We reaffirm our finding and will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Memorandum from the U.S. Department of Housing and Urban Development, Additional Revision, and Extension of December 2020 and April 2020 Memorandum ? Availability of Waivers and Suspensions of the HOME Program Requirements in Response to COVID-19 Pandemic. Title 24 CFR Part 92, Home Investment Partnerships Program, section 92.504(d)(1)(iii), Annual inspections, describes the tenant-based rental assistance program requirements for annual inspections. Title 24 CFR Part 92, Home Investment Partnerships Program, sections 92.209(i), 92.251(f), and 92.504(d), Housing Quality Inspection requirements, describe the program specific requirements for performing on-site inspections and determining compliance with quality standards.
2022-002 The County had inadequate internal controls for ensuring compliance with the Housing Quality Standards inspection requirements of its Home Investment Partnerships Program. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2022, the County spent $3,010,680 under the Home Investment Partnerships Program (HOME Program). The objectives of the HOME Program include: (1) Expanding the supply of decent and affordable housing, particularly housing for people with low-and very low-incomes (2) Strengthening the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing (3) Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing (4) Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. These inspections must be completed no less than: ? Every three years for projects containing one to four units ? Every two years for projects containing five to 25 units ? Every year for projects containing 26 or more units However, in response to the COVID-19 pandemic, the U.S. Department of Housing and Urban Development (HUD) issued a waiver of Housing Quality Standards (HQS) inspections. The waiver period spanned from April 10, 2020, to December 31, 2021, and required on-site inspections to resume within 180 days of the end of the waiver period. Our audit found the County did not have adequate internal controls for ensuring compliance with the HOME Program?s HQS requirement to resume on-site inspections when the HUD waiver expired. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition The County was operating under COVID-19 pandemic protocols during the audit period. The state and County rescinded the emergency order on October 31, 2022, and the federal government rescinded the emergency declaration on May 11, 2023. Therefore, during the period under audit, grant administrators were operating with limited in-person contact, and they determined that HQS inspections should be delayed until fiscal year 2023 when all levels of emergency orders were lifted. Effect of Condition The County did not conduct any HQS inspections during fiscal year 2022. As such, the County could not demonstrate that the HOME Program properties it was managing met HQS inspection requirements and were being maintained in a decent, safe and sanitary manner. Recommendation We recommend the County strengthen internal controls to ensure its HOME Program properties meet HQS compliance requirements. Specifically, the County should ensure it performs HQS inspections within the prescribed timeframe. County?s Response The County disagrees that there were inadequate controls. The County has had and does have procedures for conducting physical inspections in conformance with statutory and regulatory guidance and maintains a database for tracking inspections due and completed. Those procedures were suspended as a direct result of the COVID-19 pandemic and associated federal, state, and local directives and guidance. The County has been fully aware of the institution of U.S. Department of Housing and Urban Development (HUD) waiver of the requirement to conduct physical inspections of HOME units as well as their notification that inspections should be resumed. The County communicated with HUD regarding the suspension of HOME inspections during the public health emergency and continuing COVID-19 protocols that impacted the timing for resuming inspections. The County planned for the resumption of inspections and updated those plans based on the COVID-19 emergency and protocols at the federal, state, and local levels which did not align with the end of the HUD waiver nationally. The County and state COVID-19 health emergency did not end until October 31, 2022 and the federal COVID-19 National Public Health emergency did not end until May 11, 2023. The County planned for safely resuming physical inspections at the end of the federal emergency declaration taking into consideration the risk for County staff, agency staff, and tenants to best address the regulatory requirements during this global pandemic. The County communicated with the HUD Seattle Field Office on the planned resumption of HOME unit inspections. In addition to communications with HUD, the information was included in the HUD Consolidated Annual Performance and Evaluation Report (CAPER). The CAPER provides annual reporting on performance, including the HOME Program. HUD approved the 2021 (July 2021 ? June 2022) CAPER which indicated the County did not perform inspections during this timeframe due to the COVID 19 pandemic. The 2022 CAPER (July 2022 -June 2023) is currently in the public comment phase to be submitted in September 2023. It includes an update on inspections consistent with the information provided to HUD that the County was still under COVID 19 protocols during almost all of that timeframe and planned to resume inspections in 2023 as was to be included in the 2022 CAPER in conformance with HUD guidance. The County resumed HOME inspections in June 2023 utilizing our standard protocols and controls. Auditor?s Remarks We appreciate the County?s assistance throughout our audit and its planned corrective action to resolving this matter. We performed our audit in accordance with requirements from the Federal agency, the U.S. Department of Housing and Urban Development, which required physical inspections to resume 180 days after December 31, 2021. We reaffirm our finding and will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Memorandum from the U.S. Department of Housing and Urban Development, Additional Revision, and Extension of December 2020 and April 2020 Memorandum ? Availability of Waivers and Suspensions of the HOME Program Requirements in Response to COVID-19 Pandemic. Title 24 CFR Part 92, Home Investment Partnerships Program, section 92.504(d)(1)(iii), Annual inspections, describes the tenant-based rental assistance program requirements for annual inspections. Title 24 CFR Part 92, Home Investment Partnerships Program, sections 92.209(i), 92.251(f), and 92.504(d), Housing Quality Inspection requirements, describe the program specific requirements for performing on-site inspections and determining compliance with quality standards.
2022-002 The County had inadequate internal controls for ensuring compliance with the Housing Quality Standards inspection requirements of its Home Investment Partnerships Program. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2022, the County spent $3,010,680 under the Home Investment Partnerships Program (HOME Program). The objectives of the HOME Program include: (1) Expanding the supply of decent and affordable housing, particularly housing for people with low-and very low-incomes (2) Strengthening the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing (3) Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing (4) Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. These inspections must be completed no less than: ? Every three years for projects containing one to four units ? Every two years for projects containing five to 25 units ? Every year for projects containing 26 or more units However, in response to the COVID-19 pandemic, the U.S. Department of Housing and Urban Development (HUD) issued a waiver of Housing Quality Standards (HQS) inspections. The waiver period spanned from April 10, 2020, to December 31, 2021, and required on-site inspections to resume within 180 days of the end of the waiver period. Our audit found the County did not have adequate internal controls for ensuring compliance with the HOME Program?s HQS requirement to resume on-site inspections when the HUD waiver expired. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition The County was operating under COVID-19 pandemic protocols during the audit period. The state and County rescinded the emergency order on October 31, 2022, and the federal government rescinded the emergency declaration on May 11, 2023. Therefore, during the period under audit, grant administrators were operating with limited in-person contact, and they determined that HQS inspections should be delayed until fiscal year 2023 when all levels of emergency orders were lifted. Effect of Condition The County did not conduct any HQS inspections during fiscal year 2022. As such, the County could not demonstrate that the HOME Program properties it was managing met HQS inspection requirements and were being maintained in a decent, safe and sanitary manner. Recommendation We recommend the County strengthen internal controls to ensure its HOME Program properties meet HQS compliance requirements. Specifically, the County should ensure it performs HQS inspections within the prescribed timeframe. County?s Response The County disagrees that there were inadequate controls. The County has had and does have procedures for conducting physical inspections in conformance with statutory and regulatory guidance and maintains a database for tracking inspections due and completed. Those procedures were suspended as a direct result of the COVID-19 pandemic and associated federal, state, and local directives and guidance. The County has been fully aware of the institution of U.S. Department of Housing and Urban Development (HUD) waiver of the requirement to conduct physical inspections of HOME units as well as their notification that inspections should be resumed. The County communicated with HUD regarding the suspension of HOME inspections during the public health emergency and continuing COVID-19 protocols that impacted the timing for resuming inspections. The County planned for the resumption of inspections and updated those plans based on the COVID-19 emergency and protocols at the federal, state, and local levels which did not align with the end of the HUD waiver nationally. The County and state COVID-19 health emergency did not end until October 31, 2022 and the federal COVID-19 National Public Health emergency did not end until May 11, 2023. The County planned for safely resuming physical inspections at the end of the federal emergency declaration taking into consideration the risk for County staff, agency staff, and tenants to best address the regulatory requirements during this global pandemic. The County communicated with the HUD Seattle Field Office on the planned resumption of HOME unit inspections. In addition to communications with HUD, the information was included in the HUD Consolidated Annual Performance and Evaluation Report (CAPER). The CAPER provides annual reporting on performance, including the HOME Program. HUD approved the 2021 (July 2021 ? June 2022) CAPER which indicated the County did not perform inspections during this timeframe due to the COVID 19 pandemic. The 2022 CAPER (July 2022 -June 2023) is currently in the public comment phase to be submitted in September 2023. It includes an update on inspections consistent with the information provided to HUD that the County was still under COVID 19 protocols during almost all of that timeframe and planned to resume inspections in 2023 as was to be included in the 2022 CAPER in conformance with HUD guidance. The County resumed HOME inspections in June 2023 utilizing our standard protocols and controls. Auditor?s Remarks We appreciate the County?s assistance throughout our audit and its planned corrective action to resolving this matter. We performed our audit in accordance with requirements from the Federal agency, the U.S. Department of Housing and Urban Development, which required physical inspections to resume 180 days after December 31, 2021. We reaffirm our finding and will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Memorandum from the U.S. Department of Housing and Urban Development, Additional Revision, and Extension of December 2020 and April 2020 Memorandum ? Availability of Waivers and Suspensions of the HOME Program Requirements in Response to COVID-19 Pandemic. Title 24 CFR Part 92, Home Investment Partnerships Program, section 92.504(d)(1)(iii), Annual inspections, describes the tenant-based rental assistance program requirements for annual inspections. Title 24 CFR Part 92, Home Investment Partnerships Program, sections 92.209(i), 92.251(f), and 92.504(d), Housing Quality Inspection requirements, describe the program specific requirements for performing on-site inspections and determining compliance with quality standards.
2022-002 The County had inadequate internal controls for ensuring compliance with the Housing Quality Standards inspection requirements of its Home Investment Partnerships Program. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2022, the County spent $3,010,680 under the Home Investment Partnerships Program (HOME Program). The objectives of the HOME Program include: (1) Expanding the supply of decent and affordable housing, particularly housing for people with low-and very low-incomes (2) Strengthening the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing (3) Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing (4) Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. These inspections must be completed no less than: ? Every three years for projects containing one to four units ? Every two years for projects containing five to 25 units ? Every year for projects containing 26 or more units However, in response to the COVID-19 pandemic, the U.S. Department of Housing and Urban Development (HUD) issued a waiver of Housing Quality Standards (HQS) inspections. The waiver period spanned from April 10, 2020, to December 31, 2021, and required on-site inspections to resume within 180 days of the end of the waiver period. Our audit found the County did not have adequate internal controls for ensuring compliance with the HOME Program?s HQS requirement to resume on-site inspections when the HUD waiver expired. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition The County was operating under COVID-19 pandemic protocols during the audit period. The state and County rescinded the emergency order on October 31, 2022, and the federal government rescinded the emergency declaration on May 11, 2023. Therefore, during the period under audit, grant administrators were operating with limited in-person contact, and they determined that HQS inspections should be delayed until fiscal year 2023 when all levels of emergency orders were lifted. Effect of Condition The County did not conduct any HQS inspections during fiscal year 2022. As such, the County could not demonstrate that the HOME Program properties it was managing met HQS inspection requirements and were being maintained in a decent, safe and sanitary manner. Recommendation We recommend the County strengthen internal controls to ensure its HOME Program properties meet HQS compliance requirements. Specifically, the County should ensure it performs HQS inspections within the prescribed timeframe. County?s Response The County disagrees that there were inadequate controls. The County has had and does have procedures for conducting physical inspections in conformance with statutory and regulatory guidance and maintains a database for tracking inspections due and completed. Those procedures were suspended as a direct result of the COVID-19 pandemic and associated federal, state, and local directives and guidance. The County has been fully aware of the institution of U.S. Department of Housing and Urban Development (HUD) waiver of the requirement to conduct physical inspections of HOME units as well as their notification that inspections should be resumed. The County communicated with HUD regarding the suspension of HOME inspections during the public health emergency and continuing COVID-19 protocols that impacted the timing for resuming inspections. The County planned for the resumption of inspections and updated those plans based on the COVID-19 emergency and protocols at the federal, state, and local levels which did not align with the end of the HUD waiver nationally. The County and state COVID-19 health emergency did not end until October 31, 2022 and the federal COVID-19 National Public Health emergency did not end until May 11, 2023. The County planned for safely resuming physical inspections at the end of the federal emergency declaration taking into consideration the risk for County staff, agency staff, and tenants to best address the regulatory requirements during this global pandemic. The County communicated with the HUD Seattle Field Office on the planned resumption of HOME unit inspections. In addition to communications with HUD, the information was included in the HUD Consolidated Annual Performance and Evaluation Report (CAPER). The CAPER provides annual reporting on performance, including the HOME Program. HUD approved the 2021 (July 2021 ? June 2022) CAPER which indicated the County did not perform inspections during this timeframe due to the COVID 19 pandemic. The 2022 CAPER (July 2022 -June 2023) is currently in the public comment phase to be submitted in September 2023. It includes an update on inspections consistent with the information provided to HUD that the County was still under COVID 19 protocols during almost all of that timeframe and planned to resume inspections in 2023 as was to be included in the 2022 CAPER in conformance with HUD guidance. The County resumed HOME inspections in June 2023 utilizing our standard protocols and controls. Auditor?s Remarks We appreciate the County?s assistance throughout our audit and its planned corrective action to resolving this matter. We performed our audit in accordance with requirements from the Federal agency, the U.S. Department of Housing and Urban Development, which required physical inspections to resume 180 days after December 31, 2021. We reaffirm our finding and will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Memorandum from the U.S. Department of Housing and Urban Development, Additional Revision, and Extension of December 2020 and April 2020 Memorandum ? Availability of Waivers and Suspensions of the HOME Program Requirements in Response to COVID-19 Pandemic. Title 24 CFR Part 92, Home Investment Partnerships Program, section 92.504(d)(1)(iii), Annual inspections, describes the tenant-based rental assistance program requirements for annual inspections. Title 24 CFR Part 92, Home Investment Partnerships Program, sections 92.209(i), 92.251(f), and 92.504(d), Housing Quality Inspection requirements, describe the program specific requirements for performing on-site inspections and determining compliance with quality standards.
2022-002 The County had inadequate internal controls for ensuring compliance with the Housing Quality Standards inspection requirements of its Home Investment Partnerships Program. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Description of Condition During fiscal year 2022, the County spent $3,010,680 under the Home Investment Partnerships Program (HOME Program). The objectives of the HOME Program include: (1) Expanding the supply of decent and affordable housing, particularly housing for people with low-and very low-incomes (2) Strengthening the abilities of state and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing (3) Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing (4) Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, in the production and operation of affordable housing Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. During the period of affordability (i.e., the period for which the nonfederal entity must maintain subsidized housing) for HOME-assisted rental housing, the participating jurisdiction must perform on-site inspections to determine compliance with property standards and verify the information submitted by the owners. These inspections must be completed no less than: ? Every three years for projects containing one to four units ? Every two years for projects containing five to 25 units ? Every year for projects containing 26 or more units However, in response to the COVID-19 pandemic, the U.S. Department of Housing and Urban Development (HUD) issued a waiver of Housing Quality Standards (HQS) inspections. The waiver period spanned from April 10, 2020, to December 31, 2021, and required on-site inspections to resume within 180 days of the end of the waiver period. Our audit found the County did not have adequate internal controls for ensuring compliance with the HOME Program?s HQS requirement to resume on-site inspections when the HUD waiver expired. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition The County was operating under COVID-19 pandemic protocols during the audit period. The state and County rescinded the emergency order on October 31, 2022, and the federal government rescinded the emergency declaration on May 11, 2023. Therefore, during the period under audit, grant administrators were operating with limited in-person contact, and they determined that HQS inspections should be delayed until fiscal year 2023 when all levels of emergency orders were lifted. Effect of Condition The County did not conduct any HQS inspections during fiscal year 2022. As such, the County could not demonstrate that the HOME Program properties it was managing met HQS inspection requirements and were being maintained in a decent, safe and sanitary manner. Recommendation We recommend the County strengthen internal controls to ensure its HOME Program properties meet HQS compliance requirements. Specifically, the County should ensure it performs HQS inspections within the prescribed timeframe. County?s Response The County disagrees that there were inadequate controls. The County has had and does have procedures for conducting physical inspections in conformance with statutory and regulatory guidance and maintains a database for tracking inspections due and completed. Those procedures were suspended as a direct result of the COVID-19 pandemic and associated federal, state, and local directives and guidance. The County has been fully aware of the institution of U.S. Department of Housing and Urban Development (HUD) waiver of the requirement to conduct physical inspections of HOME units as well as their notification that inspections should be resumed. The County communicated with HUD regarding the suspension of HOME inspections during the public health emergency and continuing COVID-19 protocols that impacted the timing for resuming inspections. The County planned for the resumption of inspections and updated those plans based on the COVID-19 emergency and protocols at the federal, state, and local levels which did not align with the end of the HUD waiver nationally. The County and state COVID-19 health emergency did not end until October 31, 2022 and the federal COVID-19 National Public Health emergency did not end until May 11, 2023. The County planned for safely resuming physical inspections at the end of the federal emergency declaration taking into consideration the risk for County staff, agency staff, and tenants to best address the regulatory requirements during this global pandemic. The County communicated with the HUD Seattle Field Office on the planned resumption of HOME unit inspections. In addition to communications with HUD, the information was included in the HUD Consolidated Annual Performance and Evaluation Report (CAPER). The CAPER provides annual reporting on performance, including the HOME Program. HUD approved the 2021 (July 2021 ? June 2022) CAPER which indicated the County did not perform inspections during this timeframe due to the COVID 19 pandemic. The 2022 CAPER (July 2022 -June 2023) is currently in the public comment phase to be submitted in September 2023. It includes an update on inspections consistent with the information provided to HUD that the County was still under COVID 19 protocols during almost all of that timeframe and planned to resume inspections in 2023 as was to be included in the 2022 CAPER in conformance with HUD guidance. The County resumed HOME inspections in June 2023 utilizing our standard protocols and controls. Auditor?s Remarks We appreciate the County?s assistance throughout our audit and its planned corrective action to resolving this matter. We performed our audit in accordance with requirements from the Federal agency, the U.S. Department of Housing and Urban Development, which required physical inspections to resume 180 days after December 31, 2021. We reaffirm our finding and will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Memorandum from the U.S. Department of Housing and Urban Development, Additional Revision, and Extension of December 2020 and April 2020 Memorandum ? Availability of Waivers and Suspensions of the HOME Program Requirements in Response to COVID-19 Pandemic. Title 24 CFR Part 92, Home Investment Partnerships Program, section 92.504(d)(1)(iii), Annual inspections, describes the tenant-based rental assistance program requirements for annual inspections. Title 24 CFR Part 92, Home Investment Partnerships Program, sections 92.209(i), 92.251(f), and 92.504(d), Housing Quality Inspection requirements, describe the program specific requirements for performing on-site inspections and determining compliance with quality standards.
2022-003 The County did not have adequate internal controls for ensuring federal match contributions from subrecipients were adequately supported. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Background The Continuum of Care (CoC) program is designed to promote community-wide commitment to the goal of ending homelessness. The program provides funding to quickly rehouse homeless people and families while minimizing the trauma and dislocation homelessness causes, promote access to and effective use of mainstream programs by homeless people and families, and optimize self-sufficiency among people and families experiencing homelessness. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established internal controls. Federal regulations also require that match contributions be adequately documented and come from allowable expenditures meeting federal cost principles. The CoC program requires recipients and subrecipients to provide nonfederal matching funds of 25 percent of their total federal expenditures. The County provided this match through its own funds and funds provided by its subrecipients. For the program year ending on June 30, 2022, the County and its subrecipients were required to provide a total match of $2,714,574. As the prime recipient, the County is responsible for monitoring the activities of the subrecipients to ensure they comply with federal regulations, including that subrecipient match contributions are adequately documented. Description of Condition The County?s controls were inadequate for ensuring it reviewed and retained subrecipient match contribution documentation to gain assurance that match costs came from allowable sources. The County contractually requires subrecipients to provide documentation of match contributions monthly, but it only enforces this requirement for the first and last month of each program year. In addition, the County?s subrecipient monitoring procedures state that it samples the remaining program months and reviews match documentation, but staff did not perform this process for fiscal year 2022. We consider these deficiencies in internal controls to be a material weakness. Cause of Condition Employees responsible for administering the program determined the review of the first and last month of match documentation of each program year, along with the review performed as part of subrecipient monitoring, would be sufficient to ensure match amounts were adequately supported and came from allowable sources. However, in April 2022, the County experienced turnover in the position responsible for performing subrecipient monitoring reviews over documentation of match contributions, and this position remained vacant for more than a year. As a result, a key part of the process for reviewing a sample of match documentation throughout the year was not performed during the audit period. Effect of Condition During fiscal year 2022, the County provided a total match of $4,432,463. Although this amount in total exceeded the required match of $2,714,574, the County did not review and obtain adequate documentation of subrecipient match contributions totaling $3,536,545, or 79.8 percent of total match contributions. Without adequate documentation to support subrecipient match contributions, the County is not in compliance with the granting agency?s recordkeeping requirements. Further, the County cannot assure federal grantors that matching contributions reported are accurate and valid. In addition, unsupported match contributions could result in a reduction of future federal awards. During the audit, the County obtained additional documentation from subrecipients to support match contributions. This reduced the amount of unsupported subrecipient match contributions to $896,966, or 20.2 percent of total match contributions. As the County initially provided match contributions that were more than the amount required, the remaining supported amount met the overall match requirements. As such, we are not questioning costs. Recommendation We recommend the County strengthen internal controls over federal match contributions from subrecipients to ensure it reviews and retains adequate documentation of the source and allowability of the match. County?s Response The County does have established internal controls for matching requirements. These controls include remote review of Program Income and Match Reports (summary, GL for cash match, in-kind summary sheet), first and last month review of source documentation, additional requests for backup documentation if concerns are identified, monthly staff review of match report sheet breaking down reported match amounts by eligible category for each agency providing in-kind match, and onsite review of match source documentation for selected months other than first/last month. The County?s contract language for agencies to provide the match documentation was further detailed in a memo to CoC agencies. The memo identified the types of documentation agencies are to submit, and that the agencies are not expected to provide all source documentation on months 2-11. The County wrote the contract language to generally require match documentation monthly and implemented its intent specifically through the memo. CFR part 578.73 requires the recipient or subrecipient to document and maintain match documentation. The County as recipient and CoC subrecipients maintained source documentation. One of the agencies for which supporting documentation was requested during the audit, did not have adequate time to provide the documentation, as the agency had moved offices and most of the support documentation had not been unboxed. Another factor was some of the support documentation contains HIPAA-covered personal identifiable information (PII) that needs to be handled and maintain under strict confidential requirements. This would require additional time to redact PII to maintain confidentiality. The agency was able to provide most but not all of the support documentation by the deadline under these statutory restrictions. While we do have established internal controls, the County was unable to perform onsite match monitoring during 2022 due to staff turnover and Covid-19 restrictions. Labor market conditions during 2022 were extremely challenging, and as a result it took a considerable amount of time to fill the Housing and Community Services Financial Compliance Officer 1 (FCO1) position. The FCO1 performs remote and onsite monitoring activities for cash and in-kind match and works closely with program staff and fiscal staff. The position was filled with onboarding and training occurring in the later part of 2022 and first part of 2023. Onsite and remote FCO1 match monitoring resumed in 2023 and the FCO1 will review current practices to recommend possible improvements for implementation. Auditor?s Remarks We appreciate the County?s commitment to resolve this finding and thank the County for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 306, Cost sharing or matching, describes the requirements for match contributions to be allowable under federal cost principles. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the requirements for federal expenditures to be adequately documented. Title 24 CFR Part 578, Continuum of Care Program, section 103, Recordkeeping requirements, describes the requirements for recipients to keep records of the source and use of match contributions.
2022-003 The County did not have adequate internal controls for ensuring federal match contributions from subrecipients were adequately supported. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Background The Continuum of Care (CoC) program is designed to promote community-wide commitment to the goal of ending homelessness. The program provides funding to quickly rehouse homeless people and families while minimizing the trauma and dislocation homelessness causes, promote access to and effective use of mainstream programs by homeless people and families, and optimize self-sufficiency among people and families experiencing homelessness. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established internal controls. Federal regulations also require that match contributions be adequately documented and come from allowable expenditures meeting federal cost principles. The CoC program requires recipients and subrecipients to provide nonfederal matching funds of 25 percent of their total federal expenditures. The County provided this match through its own funds and funds provided by its subrecipients. For the program year ending on June 30, 2022, the County and its subrecipients were required to provide a total match of $2,714,574. As the prime recipient, the County is responsible for monitoring the activities of the subrecipients to ensure they comply with federal regulations, including that subrecipient match contributions are adequately documented. Description of Condition The County?s controls were inadequate for ensuring it reviewed and retained subrecipient match contribution documentation to gain assurance that match costs came from allowable sources. The County contractually requires subrecipients to provide documentation of match contributions monthly, but it only enforces this requirement for the first and last month of each program year. In addition, the County?s subrecipient monitoring procedures state that it samples the remaining program months and reviews match documentation, but staff did not perform this process for fiscal year 2022. We consider these deficiencies in internal controls to be a material weakness. Cause of Condition Employees responsible for administering the program determined the review of the first and last month of match documentation of each program year, along with the review performed as part of subrecipient monitoring, would be sufficient to ensure match amounts were adequately supported and came from allowable sources. However, in April 2022, the County experienced turnover in the position responsible for performing subrecipient monitoring reviews over documentation of match contributions, and this position remained vacant for more than a year. As a result, a key part of the process for reviewing a sample of match documentation throughout the year was not performed during the audit period. Effect of Condition During fiscal year 2022, the County provided a total match of $4,432,463. Although this amount in total exceeded the required match of $2,714,574, the County did not review and obtain adequate documentation of subrecipient match contributions totaling $3,536,545, or 79.8 percent of total match contributions. Without adequate documentation to support subrecipient match contributions, the County is not in compliance with the granting agency?s recordkeeping requirements. Further, the County cannot assure federal grantors that matching contributions reported are accurate and valid. In addition, unsupported match contributions could result in a reduction of future federal awards. During the audit, the County obtained additional documentation from subrecipients to support match contributions. This reduced the amount of unsupported subrecipient match contributions to $896,966, or 20.2 percent of total match contributions. As the County initially provided match contributions that were more than the amount required, the remaining supported amount met the overall match requirements. As such, we are not questioning costs. Recommendation We recommend the County strengthen internal controls over federal match contributions from subrecipients to ensure it reviews and retains adequate documentation of the source and allowability of the match. County?s Response The County does have established internal controls for matching requirements. These controls include remote review of Program Income and Match Reports (summary, GL for cash match, in-kind summary sheet), first and last month review of source documentation, additional requests for backup documentation if concerns are identified, monthly staff review of match report sheet breaking down reported match amounts by eligible category for each agency providing in-kind match, and onsite review of match source documentation for selected months other than first/last month. The County?s contract language for agencies to provide the match documentation was further detailed in a memo to CoC agencies. The memo identified the types of documentation agencies are to submit, and that the agencies are not expected to provide all source documentation on months 2-11. The County wrote the contract language to generally require match documentation monthly and implemented its intent specifically through the memo. CFR part 578.73 requires the recipient or subrecipient to document and maintain match documentation. The County as recipient and CoC subrecipients maintained source documentation. One of the agencies for which supporting documentation was requested during the audit, did not have adequate time to provide the documentation, as the agency had moved offices and most of the support documentation had not been unboxed. Another factor was some of the support documentation contains HIPAA-covered personal identifiable information (PII) that needs to be handled and maintain under strict confidential requirements. This would require additional time to redact PII to maintain confidentiality. The agency was able to provide most but not all of the support documentation by the deadline under these statutory restrictions. While we do have established internal controls, the County was unable to perform onsite match monitoring during 2022 due to staff turnover and Covid-19 restrictions. Labor market conditions during 2022 were extremely challenging, and as a result it took a considerable amount of time to fill the Housing and Community Services Financial Compliance Officer 1 (FCO1) position. The FCO1 performs remote and onsite monitoring activities for cash and in-kind match and works closely with program staff and fiscal staff. The position was filled with onboarding and training occurring in the later part of 2022 and first part of 2023. Onsite and remote FCO1 match monitoring resumed in 2023 and the FCO1 will review current practices to recommend possible improvements for implementation. Auditor?s Remarks We appreciate the County?s commitment to resolve this finding and thank the County for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 306, Cost sharing or matching, describes the requirements for match contributions to be allowable under federal cost principles. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the requirements for federal expenditures to be adequately documented. Title 24 CFR Part 578, Continuum of Care Program, section 103, Recordkeeping requirements, describes the requirements for recipients to keep records of the source and use of match contributions.
2022-003 The County did not have adequate internal controls for ensuring federal match contributions from subrecipients were adequately supported. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Background The Continuum of Care (CoC) program is designed to promote community-wide commitment to the goal of ending homelessness. The program provides funding to quickly rehouse homeless people and families while minimizing the trauma and dislocation homelessness causes, promote access to and effective use of mainstream programs by homeless people and families, and optimize self-sufficiency among people and families experiencing homelessness. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established internal controls. Federal regulations also require that match contributions be adequately documented and come from allowable expenditures meeting federal cost principles. The CoC program requires recipients and subrecipients to provide nonfederal matching funds of 25 percent of their total federal expenditures. The County provided this match through its own funds and funds provided by its subrecipients. For the program year ending on June 30, 2022, the County and its subrecipients were required to provide a total match of $2,714,574. As the prime recipient, the County is responsible for monitoring the activities of the subrecipients to ensure they comply with federal regulations, including that subrecipient match contributions are adequately documented. Description of Condition The County?s controls were inadequate for ensuring it reviewed and retained subrecipient match contribution documentation to gain assurance that match costs came from allowable sources. The County contractually requires subrecipients to provide documentation of match contributions monthly, but it only enforces this requirement for the first and last month of each program year. In addition, the County?s subrecipient monitoring procedures state that it samples the remaining program months and reviews match documentation, but staff did not perform this process for fiscal year 2022. We consider these deficiencies in internal controls to be a material weakness. Cause of Condition Employees responsible for administering the program determined the review of the first and last month of match documentation of each program year, along with the review performed as part of subrecipient monitoring, would be sufficient to ensure match amounts were adequately supported and came from allowable sources. However, in April 2022, the County experienced turnover in the position responsible for performing subrecipient monitoring reviews over documentation of match contributions, and this position remained vacant for more than a year. As a result, a key part of the process for reviewing a sample of match documentation throughout the year was not performed during the audit period. Effect of Condition During fiscal year 2022, the County provided a total match of $4,432,463. Although this amount in total exceeded the required match of $2,714,574, the County did not review and obtain adequate documentation of subrecipient match contributions totaling $3,536,545, or 79.8 percent of total match contributions. Without adequate documentation to support subrecipient match contributions, the County is not in compliance with the granting agency?s recordkeeping requirements. Further, the County cannot assure federal grantors that matching contributions reported are accurate and valid. In addition, unsupported match contributions could result in a reduction of future federal awards. During the audit, the County obtained additional documentation from subrecipients to support match contributions. This reduced the amount of unsupported subrecipient match contributions to $896,966, or 20.2 percent of total match contributions. As the County initially provided match contributions that were more than the amount required, the remaining supported amount met the overall match requirements. As such, we are not questioning costs. Recommendation We recommend the County strengthen internal controls over federal match contributions from subrecipients to ensure it reviews and retains adequate documentation of the source and allowability of the match. County?s Response The County does have established internal controls for matching requirements. These controls include remote review of Program Income and Match Reports (summary, GL for cash match, in-kind summary sheet), first and last month review of source documentation, additional requests for backup documentation if concerns are identified, monthly staff review of match report sheet breaking down reported match amounts by eligible category for each agency providing in-kind match, and onsite review of match source documentation for selected months other than first/last month. The County?s contract language for agencies to provide the match documentation was further detailed in a memo to CoC agencies. The memo identified the types of documentation agencies are to submit, and that the agencies are not expected to provide all source documentation on months 2-11. The County wrote the contract language to generally require match documentation monthly and implemented its intent specifically through the memo. CFR part 578.73 requires the recipient or subrecipient to document and maintain match documentation. The County as recipient and CoC subrecipients maintained source documentation. One of the agencies for which supporting documentation was requested during the audit, did not have adequate time to provide the documentation, as the agency had moved offices and most of the support documentation had not been unboxed. Another factor was some of the support documentation contains HIPAA-covered personal identifiable information (PII) that needs to be handled and maintain under strict confidential requirements. This would require additional time to redact PII to maintain confidentiality. The agency was able to provide most but not all of the support documentation by the deadline under these statutory restrictions. While we do have established internal controls, the County was unable to perform onsite match monitoring during 2022 due to staff turnover and Covid-19 restrictions. Labor market conditions during 2022 were extremely challenging, and as a result it took a considerable amount of time to fill the Housing and Community Services Financial Compliance Officer 1 (FCO1) position. The FCO1 performs remote and onsite monitoring activities for cash and in-kind match and works closely with program staff and fiscal staff. The position was filled with onboarding and training occurring in the later part of 2022 and first part of 2023. Onsite and remote FCO1 match monitoring resumed in 2023 and the FCO1 will review current practices to recommend possible improvements for implementation. Auditor?s Remarks We appreciate the County?s commitment to resolve this finding and thank the County for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 306, Cost sharing or matching, describes the requirements for match contributions to be allowable under federal cost principles. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the requirements for federal expenditures to be adequately documented. Title 24 CFR Part 578, Continuum of Care Program, section 103, Recordkeeping requirements, describes the requirements for recipients to keep records of the source and use of match contributions.
2022-003 The County did not have adequate internal controls for ensuring federal match contributions from subrecipients were adequately supported. "See Schedule of Federal Award Findings and Questioned Costs for chart/table" Background The Continuum of Care (CoC) program is designed to promote community-wide commitment to the goal of ending homelessness. The program provides funding to quickly rehouse homeless people and families while minimizing the trauma and dislocation homelessness causes, promote access to and effective use of mainstream programs by homeless people and families, and optimize self-sufficiency among people and families experiencing homelessness. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established internal controls. Federal regulations also require that match contributions be adequately documented and come from allowable expenditures meeting federal cost principles. The CoC program requires recipients and subrecipients to provide nonfederal matching funds of 25 percent of their total federal expenditures. The County provided this match through its own funds and funds provided by its subrecipients. For the program year ending on June 30, 2022, the County and its subrecipients were required to provide a total match of $2,714,574. As the prime recipient, the County is responsible for monitoring the activities of the subrecipients to ensure they comply with federal regulations, including that subrecipient match contributions are adequately documented. Description of Condition The County?s controls were inadequate for ensuring it reviewed and retained subrecipient match contribution documentation to gain assurance that match costs came from allowable sources. The County contractually requires subrecipients to provide documentation of match contributions monthly, but it only enforces this requirement for the first and last month of each program year. In addition, the County?s subrecipient monitoring procedures state that it samples the remaining program months and reviews match documentation, but staff did not perform this process for fiscal year 2022. We consider these deficiencies in internal controls to be a material weakness. Cause of Condition Employees responsible for administering the program determined the review of the first and last month of match documentation of each program year, along with the review performed as part of subrecipient monitoring, would be sufficient to ensure match amounts were adequately supported and came from allowable sources. However, in April 2022, the County experienced turnover in the position responsible for performing subrecipient monitoring reviews over documentation of match contributions, and this position remained vacant for more than a year. As a result, a key part of the process for reviewing a sample of match documentation throughout the year was not performed during the audit period. Effect of Condition During fiscal year 2022, the County provided a total match of $4,432,463. Although this amount in total exceeded the required match of $2,714,574, the County did not review and obtain adequate documentation of subrecipient match contributions totaling $3,536,545, or 79.8 percent of total match contributions. Without adequate documentation to support subrecipient match contributions, the County is not in compliance with the granting agency?s recordkeeping requirements. Further, the County cannot assure federal grantors that matching contributions reported are accurate and valid. In addition, unsupported match contributions could result in a reduction of future federal awards. During the audit, the County obtained additional documentation from subrecipients to support match contributions. This reduced the amount of unsupported subrecipient match contributions to $896,966, or 20.2 percent of total match contributions. As the County initially provided match contributions that were more than the amount required, the remaining supported amount met the overall match requirements. As such, we are not questioning costs. Recommendation We recommend the County strengthen internal controls over federal match contributions from subrecipients to ensure it reviews and retains adequate documentation of the source and allowability of the match. County?s Response The County does have established internal controls for matching requirements. These controls include remote review of Program Income and Match Reports (summary, GL for cash match, in-kind summary sheet), first and last month review of source documentation, additional requests for backup documentation if concerns are identified, monthly staff review of match report sheet breaking down reported match amounts by eligible category for each agency providing in-kind match, and onsite review of match source documentation for selected months other than first/last month. The County?s contract language for agencies to provide the match documentation was further detailed in a memo to CoC agencies. The memo identified the types of documentation agencies are to submit, and that the agencies are not expected to provide all source documentation on months 2-11. The County wrote the contract language to generally require match documentation monthly and implemented its intent specifically through the memo. CFR part 578.73 requires the recipient or subrecipient to document and maintain match documentation. The County as recipient and CoC subrecipients maintained source documentation. One of the agencies for which supporting documentation was requested during the audit, did not have adequate time to provide the documentation, as the agency had moved offices and most of the support documentation had not been unboxed. Another factor was some of the support documentation contains HIPAA-covered personal identifiable information (PII) that needs to be handled and maintain under strict confidential requirements. This would require additional time to redact PII to maintain confidentiality. The agency was able to provide most but not all of the support documentation by the deadline under these statutory restrictions. While we do have established internal controls, the County was unable to perform onsite match monitoring during 2022 due to staff turnover and Covid-19 restrictions. Labor market conditions during 2022 were extremely challenging, and as a result it took a considerable amount of time to fill the Housing and Community Services Financial Compliance Officer 1 (FCO1) position. The FCO1 performs remote and onsite monitoring activities for cash and in-kind match and works closely with program staff and fiscal staff. The position was filled with onboarding and training occurring in the later part of 2022 and first part of 2023. Onsite and remote FCO1 match monitoring resumed in 2023 and the FCO1 will review current practices to recommend possible improvements for implementation. Auditor?s Remarks We appreciate the County?s commitment to resolve this finding and thank the County for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 306, Cost sharing or matching, describes the requirements for match contributions to be allowable under federal cost principles. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the requirements for federal expenditures to be adequately documented. Title 24 CFR Part 578, Continuum of Care Program, section 103, Recordkeeping requirements, describes the requirements for recipients to keep records of the source and use of match contributions.