Audit 349010

FY End

2024-06-30

Total Expended

$2.94M

Findings

4

Programs

2

Organization: Rockport Housing Authority (MA)

Year: 2024 Accepted: 2025-03-27

Auditor: Cbiz CPAS PC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
538003	2024-001	Material Weakness	Yes	E
538004	2024-002	Material Weakness	Yes	N
1114445	2024-001	Material Weakness	Yes	E
1114446	2024-002	Material Weakness	Yes	N

ALN	Program	Spent	Major	Findings
14.871	Section 8 Housing Choice Vouchers	$2.78M	Yes	2
21.027	Coronavirus State and Local Fiscal Recovery Funds	$154,060	-	0

Contacts

Name	Title	Type
K5LZQS5J3KJ1	Marie Mathes	Auditee
9785463181	Michael Guyder	Auditor
No contacts on file

Notes to SEFA

Title: NOTE 1 – BASIS OF PRESENTATION Accounting Policies: NOTE 1 – BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the schedule) includes the federal grant activity of Rockport Housing Authority, under programs of the federal government for the year ended June 30, 2024. The information in the schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of Rockport Housing Authority, it is not intended to and does not present the financial position, changes in net position or cash flows of Rockport Housing Authority. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the schedule are reported on the accrual basis of accounting. For cost-reimbursement awards, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. For performance-based awards, expenditures reported represent amounts earned. De Minimis Rate Used: N Rate Explanation: The Rockport Housing Authority has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the schedule) includes the federal grant activity of Rockport Housing Authority, under programs of the federal government for the year ended June 30, 2024. The information in the schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of Rockport Housing Authority, it is not intended to and does not present the financial position, changes in net position or cash flows of Rockport Housing Authority.

Title: NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: NOTE 1 – BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the schedule) includes the federal grant activity of Rockport Housing Authority, under programs of the federal government for the year ended June 30, 2024. The information in the schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of Rockport Housing Authority, it is not intended to and does not present the financial position, changes in net position or cash flows of Rockport Housing Authority. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the schedule are reported on the accrual basis of accounting. For cost-reimbursement awards, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. For performance-based awards, expenditures reported represent amounts earned. De Minimis Rate Used: N Rate Explanation: The Rockport Housing Authority has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. Expenditures reported on the schedule are reported on the accrual basis of accounting. For cost-reimbursement awards, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. For performance-based awards, expenditures reported represent amounts earned.

Title: NOTE 3 – INDIRECT COST RATE Accounting Policies: NOTE 1 – BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the schedule) includes the federal grant activity of Rockport Housing Authority, under programs of the federal government for the year ended June 30, 2024. The information in the schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of Rockport Housing Authority, it is not intended to and does not present the financial position, changes in net position or cash flows of Rockport Housing Authority. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the schedule are reported on the accrual basis of accounting. For cost-reimbursement awards, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. For performance-based awards, expenditures reported represent amounts earned. De Minimis Rate Used: N Rate Explanation: The Rockport Housing Authority has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. The Rockport Housing Authority has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.

Finding Details

Finding 2024-001

2024-001 – ELIGIBILITY Material Weakness/Material Noncompliance U.S. Department of Housing and Urban Development CFDA #: 14.871 – Housing Voucher Cluster CRITERIA PHA responsibility for reexamination and verification. (1) The PHA must conduct a reexamination of family income and composition at least annually. (2) The PHA must obtain and document in the tenant file third-party verification of the following factors, or must document in the tenant file why third-party verification was not available: (i) Reported family annual income; (ii) The value of assets; (iii) Expenses related to deductions from annual income; and (iv) Other factors that affect the determination of adjusted income. (24 CFR 982.516) CONDITION As a result of our audit procedures, we identified the following exceptions in our testing: •Thirteen (13) instances of income, asset or medical miscalculation or insufficient verification •Eleven (11) instances of incorrect payment standard CAUSE The Authority experienced turnover in the administrative department. EFFECT The Authority is potentially incorrectly calculating and adjusting tenant rent and housing assistance payments. QUESTIONED COSTS None identified. CONTEXT We selected a sample of 40 from a population of 137. This was not a statistically valid sample. REPEAT FINDING Repeat of finding 2023-001. RECOMMENDATION We recommend the Authority provide training for the performance of reexamination procedures. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.

Finding 2024-002

2024-002 – SPECIAL TEST & PROVISIONS: RENT REASONABLENESS Material Weakness/Material Noncompliance U.S. Department of Housing and Urban Development CFDA #: 14.871 – Housing Voucher Cluster CRITERIA The PHA may not approve a lease until the PHA determines that the initial rent to an owner is a reasonable rent. (2) The PHA must redetermine the reasonable rent: (i) Before any increase in the rent to an owner; (ii) If there is a 10 percent decrease in the published FMR in effect 60 days before the contract anniversary (for the unit size rented by the family) as compared with the FMR in effect 1 year before the contract anniversary. (iii) If directed by HUD. The PHA may also redetermine the reasonable rent at any other time. At all times during the assisted tenancy, the rent to owner may not exceed the reasonable rent as most recently determined or redetermined by the PHA. (24 CFR 982.507) CONDITION We identified 11 instances in which the Authority was required to perform an assessment to determine if the rent requested by the landlord is reasonable. In all eleven, the Authority did not perform properly perform the rent reasonableness assessment. CAUSE The Authority experienced turnover in the administrative department. EFFECT The Authority cannot ensure that HAP payments to landlords were reasonable. QUESTIONED COSTS Likely questioned costs - $2,528,345. CONTEXT We selected a sample of 40 from a population of 137. This was not a statistically valid sample. REPEAT FINDING Repeat of finding 2023-002. RECOMMENDATION We recommend the Authority use a third party service to ensure all required documentation is obtained and rent reasonableness procedures are performed. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.

Finding 2024-001

2024-001 – ELIGIBILITY Material Weakness/Material Noncompliance U.S. Department of Housing and Urban Development CFDA #: 14.871 – Housing Voucher Cluster CRITERIA PHA responsibility for reexamination and verification. (1) The PHA must conduct a reexamination of family income and composition at least annually. (2) The PHA must obtain and document in the tenant file third-party verification of the following factors, or must document in the tenant file why third-party verification was not available: (i) Reported family annual income; (ii) The value of assets; (iii) Expenses related to deductions from annual income; and (iv) Other factors that affect the determination of adjusted income. (24 CFR 982.516) CONDITION As a result of our audit procedures, we identified the following exceptions in our testing: •Thirteen (13) instances of income, asset or medical miscalculation or insufficient verification •Eleven (11) instances of incorrect payment standard CAUSE The Authority experienced turnover in the administrative department. EFFECT The Authority is potentially incorrectly calculating and adjusting tenant rent and housing assistance payments. QUESTIONED COSTS None identified. CONTEXT We selected a sample of 40 from a population of 137. This was not a statistically valid sample. REPEAT FINDING Repeat of finding 2023-001. RECOMMENDATION We recommend the Authority provide training for the performance of reexamination procedures. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.

Finding 2024-002

2024-002 – SPECIAL TEST & PROVISIONS: RENT REASONABLENESS Material Weakness/Material Noncompliance U.S. Department of Housing and Urban Development CFDA #: 14.871 – Housing Voucher Cluster CRITERIA The PHA may not approve a lease until the PHA determines that the initial rent to an owner is a reasonable rent. (2) The PHA must redetermine the reasonable rent: (i) Before any increase in the rent to an owner; (ii) If there is a 10 percent decrease in the published FMR in effect 60 days before the contract anniversary (for the unit size rented by the family) as compared with the FMR in effect 1 year before the contract anniversary. (iii) If directed by HUD. The PHA may also redetermine the reasonable rent at any other time. At all times during the assisted tenancy, the rent to owner may not exceed the reasonable rent as most recently determined or redetermined by the PHA. (24 CFR 982.507) CONDITION We identified 11 instances in which the Authority was required to perform an assessment to determine if the rent requested by the landlord is reasonable. In all eleven, the Authority did not perform properly perform the rent reasonableness assessment. CAUSE The Authority experienced turnover in the administrative department. EFFECT The Authority cannot ensure that HAP payments to landlords were reasonable. QUESTIONED COSTS Likely questioned costs - $2,528,345. CONTEXT We selected a sample of 40 from a population of 137. This was not a statistically valid sample. REPEAT FINDING Repeat of finding 2023-002. RECOMMENDATION We recommend the Authority use a third party service to ensure all required documentation is obtained and rent reasonableness procedures are performed. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.