2024-001 – Allowable Costs/Cost Principles – Internal Control and Compliance over Payroll Expenditures (Significant Deficiency)
Information on the Federal Program(s):
Assistance Listing Number: 14.218
Federal Program Name: Community Development Block Grants-Entitlement Grants Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: B-23-MC-06-0554
Assistance Listing Number: 14.871
Federal Program Name: Housing Voucher Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: CA120
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must:
• Be incorporated into the organization’s official records;
• Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort);
• Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and
Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies).
Condition:
Community Development Block Grants-Entitlement Grants Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the fourteen (14) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Housing Voucher Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the thirteen (13) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Cause:
Due to staff turnover, the City did not fully implement its adopted policies and procedures for relating payroll charges to grants. The City's efforts to address the prior year finding were not deemed sufficient, as it was unable to retrospectively perform reconciliations of actual hours worked for all employees. This limitation applied to both former employees who had left the City and certain current employees with time charges during parts of the fiscal year in supporting roles.
Effect or Potential Effect:
The City did not fully comply with the program’s requirements for allowable costs.
Questioned Costs:
Community Development Block Grants-Entitlement Grants Cluster
$53,625
Housing Voucher Cluster
$19,099
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2023-002.
Recommendation:
We recommend the City comply with federal regulation requiring that any employee funded by federal grant document the actual time they spend working on the grant’s objectives. Documentation must reflect “actual” time spent by employees on awards being charged. The City should develop and implement policies and procedures that ensure that employees’ compensation charged to federal programs reflect a contemporaneous or after-the-fact distribution of employees’ actual time and effort expended on federal programs. We also recommend the City enhance its internal controls over the payroll processes.
Views of Responsible Officials:
Management concurs.
2024-001 – Allowable Costs/Cost Principles – Internal Control and Compliance over Payroll Expenditures (Significant Deficiency)
Information on the Federal Program(s):
Assistance Listing Number: 14.218
Federal Program Name: Community Development Block Grants-Entitlement Grants Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: B-23-MC-06-0554
Assistance Listing Number: 14.871
Federal Program Name: Housing Voucher Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: CA120
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must:
• Be incorporated into the organization’s official records;
• Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort);
• Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and
Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies).
Condition:
Community Development Block Grants-Entitlement Grants Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the fourteen (14) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Housing Voucher Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the thirteen (13) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Cause:
Due to staff turnover, the City did not fully implement its adopted policies and procedures for relating payroll charges to grants. The City's efforts to address the prior year finding were not deemed sufficient, as it was unable to retrospectively perform reconciliations of actual hours worked for all employees. This limitation applied to both former employees who had left the City and certain current employees with time charges during parts of the fiscal year in supporting roles.
Effect or Potential Effect:
The City did not fully comply with the program’s requirements for allowable costs.
Questioned Costs:
Community Development Block Grants-Entitlement Grants Cluster
$53,625
Housing Voucher Cluster
$19,099
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2023-002.
Recommendation:
We recommend the City comply with federal regulation requiring that any employee funded by federal grant document the actual time they spend working on the grant’s objectives. Documentation must reflect “actual” time spent by employees on awards being charged. The City should develop and implement policies and procedures that ensure that employees’ compensation charged to federal programs reflect a contemporaneous or after-the-fact distribution of employees’ actual time and effort expended on federal programs. We also recommend the City enhance its internal controls over the payroll processes.
Views of Responsible Officials:
Management concurs.
2024-001 – Allowable Costs/Cost Principles – Internal Control and Compliance over Payroll Expenditures (Significant Deficiency)
Information on the Federal Program(s):
Assistance Listing Number: 14.218
Federal Program Name: Community Development Block Grants-Entitlement Grants Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: B-23-MC-06-0554
Assistance Listing Number: 14.871
Federal Program Name: Housing Voucher Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: CA120
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must:
• Be incorporated into the organization’s official records;
• Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort);
• Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and
Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies).
Condition:
Community Development Block Grants-Entitlement Grants Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the fourteen (14) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Housing Voucher Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the thirteen (13) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Cause:
Due to staff turnover, the City did not fully implement its adopted policies and procedures for relating payroll charges to grants. The City's efforts to address the prior year finding were not deemed sufficient, as it was unable to retrospectively perform reconciliations of actual hours worked for all employees. This limitation applied to both former employees who had left the City and certain current employees with time charges during parts of the fiscal year in supporting roles.
Effect or Potential Effect:
The City did not fully comply with the program’s requirements for allowable costs.
Questioned Costs:
Community Development Block Grants-Entitlement Grants Cluster
$53,625
Housing Voucher Cluster
$19,099
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2023-002.
Recommendation:
We recommend the City comply with federal regulation requiring that any employee funded by federal grant document the actual time they spend working on the grant’s objectives. Documentation must reflect “actual” time spent by employees on awards being charged. The City should develop and implement policies and procedures that ensure that employees’ compensation charged to federal programs reflect a contemporaneous or after-the-fact distribution of employees’ actual time and effort expended on federal programs. We also recommend the City enhance its internal controls over the payroll processes.
Views of Responsible Officials:
Management concurs.
2024-002 – Reporting – Internal Control and Compliance over Reporting (Material Weakness)
Information of the Federal Program(s):
Assistance Listing Number: 14.218
Federal Program Name: Community Development Block Grants-Entitlement Grants Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: B-23-MC-06-0554
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Community Development Block Grants-Entitlement Grants Cluster
The OMB Compliance Supplement requires that reports submitted to the Federal awarding agency include all activity of the reporting period, are supported by underlying accounting information and are presented in accordance with program requirements.
Pursuant to the Guidance on Cash on Hand Quarterly Report (replaced the Federal Financial Report, SF-425) and financial reporting requirements in the cooperative agreement provisions, and 2 CFR 200.327:
Quarterly reports: Program award recipients must submit Cash on Hand Quarterly Report reports to HUD quarterly, 30 days after the reporting period end date. Each report must cover all expenditures on the cooperative agreement from the start date of the reporting period to the reporting period end date. The following federal fiscal year quarter reporting period will be used for all quarterly reports, are due to HUD 30 days after the period end dates noted below:
Reporting Period Quarter 1: 7/1-9/30 Due Date of Report October 30
Reporting Period Quarter 2: 10/1-12/31 Due Date of Report January 30
Reporting Period Quarter 3: 1/1-3/31 Due Date of Report April 30
Reporting Period Quarter 4: 4/1-6/30 Due Date of Report July 30
Condition:
The City did not submit the required Cash on Hand Quarterly Report in a timely manner. The quarterly Cash on Hand Quarterly Report for the all of the four (4) reporting periods were submitted past deadline.
Federal Financial Report 7/1/2023 - 9/30/2023: Report Submission Deadline 10/20/2023, Report Submission Date 2/26/2024.
Federal Financial Report 10/01/2023-12/31/2023: Report Submission Deadline 1/20/2024, Report Submission Date 2/26/2024.
Federal Financial Report 01/01/2024 - 03/31/2024: Report Submission Deadline 4/30/2024, Report Submission Date 10/16/2024.
Federal Financial Report 04/01/2024 - 06/30/2024: Report Submission Deadline 7/30/2024, Report Submission Date 10/16/2024.
Cause:
Due to staff turnover, the City did not to consistently follow the program’s procedures to ensure that reports were submitted in a timely manner, in accordance with the timelines outlined in the Uniform Guidance.
Effect or Potential Effect:
Delay in filing the reports resulted in noncompliance with the compliance requirements.
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2023-005.
Recommendation:
We recommend that the City strengthen their report submission process and procedures to ensure all required reports are properly reviewed and approved and submitted timely.
Views of Responsible Officials:
Management concurs.
2024-003 – Subrecipient Monitoring – Internal Control and Compliance over Subrecipient Monitoring (Significant Deficiency)
Identification of the Federal Program:
Assistance Listing Number: 21.027
Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds
Federal Agency: Department of Treasury
Pass-Through Entity: N/A
Federal Award Number and Award Year: N/A
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
C.F.R. § 200.332 prescribes that the pass-through entity must conduct monitoring activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include:
1. Reviewing financial and performance reports required by the pass-through entity.
2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward.
3. Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521.
4. The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings.
Condition:
During the review of subrecipient monitoring records, several areas were noted for improvement:
• For two (2) out of three (3) subrecipients, the official agreement was not formally documented. One subrecipient agreement was executed via internal resolution and email approval; another subrecipient’s agreement lacked sufficient identification and award details, omitting key funding terminology.
• The City’s Subrecipient Monitoring Policy, which became effective on April 17, 2024, does not cover the period before the policy took effect. For all three (3) subrecipients, the City is unable to provide any documentation of the review of Financial and Performance Reports.
• The required Pre-Award Risk Assessments have not been provided for at least one subrecipient because the City’s Subrecipient Monitoring Policy, which became effective on April 17, 2024, does not cover the period before the policy took effect.
Cause:
These conditions appear to stem from transitional challenges as the City implemented the new Monitoring Policy on April 17, 2024. In addition, there is an opportunity to enhance the documentation processes by moving from informal approvals to more formal subrecipient agreements, and by ensuring that Pre-Award Risk Assessments are consistently documented and maintained.
Effect or Potential Effect:
The City was not able to do the necessary subrecipient monitoring activities resulted to internal control and compliance requirement finding.
Questioned Costs:
None.
Context:
See condition above for context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2023-006.
Recommendation:
We recommended the City to fully implement its Monitoring Policy by formalizing subrecipient agreements, strengthening internal controls, and establishing consistent processes for documenting Pre-Award Risk Assessments and Financial and Performance Reports.
Views of Responsible Officials:
Management concurs.
2024-004 – Special Tests – Internal Control and Compliance over Housing Quality Standards Inspections (Material Weakness)
Information on the Federal Program:
Assistance Listing Number: 14.871
Federal Program Name: Housing Voucher Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number and Award Year: CA120
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
24 CFR 982.405(b) states that the Public PHA (PHA) must inspect the unit leased to a family prior to the initial term of the lease, at least biennially during assisted occupancy, and at other times as needed, to determine if the unit meets Housing Quality Standards (HQS).
Condition:
During the Fail Inspection Testing, we found five (5) instances out of nine (9) in which the City did not conduct the Housing Quality Standards (HQS) failed inspection follow-up in a timely manner. Specifically:
• For two (2) samples, the reinspection was not performed within 30 days of the failed inspection, and the deficiencies were not confirmed to be resolved within the required timeframe.
• For one (1) sample, the inspection checklist indicated a failed inspection, while the inspector erroneously documented and processed it as a passed inspection, meaning o reinspection was performed.
• For one (1) sample, the reinspection was not performed, and no documentation was found to verify the follow-up inspection.
We also noted one (1) additional instance out of forty (40) samples from Eligibility Cross Testing where the failed inspection did not have any record of a follow-up reinspection.
Cause:
The former Housing Inspector failed to follow the City’s policy for HQS inspections. As a result, the City identified key action items that were not being completed properly and timely by the inspector. To address these concerns, while the inspector was currently placed on leave, the City started to utilize the consulting firm Avant Garde, effective July 1, 2024, to assist with completing the required HQS inspections. Additionally, the Housing Manager and housing staff have taken on some inspection duties, while consultants continue to handle the majority of inspections until the personnel issue is resolved.
Effect or Potential Effect:
The City has not complied with the requirements of 24 CFR 982.405(b) – Housing Quality Standards Inspections.
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Repeat Finding from Prior Year, If Applicable:
Yes. See prior year finding 2023-007.
Recommendation:
We recommend that the City continue utilizing the consulting services provided by Avant Garde to complete the necessary HQS inspections while resolving the personnel issue. Additionally, the City should strengthen internal controls to ensure that future inspections are completed in a timely manner and in full compliance with City policies.
Views of Responsible Officials:
Management concurs.
2024-004 – Special Tests – Internal Control and Compliance over Housing Quality Standards Inspections (Material Weakness)
Information on the Federal Program:
Assistance Listing Number: 14.871
Federal Program Name: Housing Voucher Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number and Award Year: CA120
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
24 CFR 982.405(b) states that the Public PHA (PHA) must inspect the unit leased to a family prior to the initial term of the lease, at least biennially during assisted occupancy, and at other times as needed, to determine if the unit meets Housing Quality Standards (HQS).
Condition:
During the Fail Inspection Testing, we found five (5) instances out of nine (9) in which the City did not conduct the Housing Quality Standards (HQS) failed inspection follow-up in a timely manner. Specifically:
• For two (2) samples, the reinspection was not performed within 30 days of the failed inspection, and the deficiencies were not confirmed to be resolved within the required timeframe.
• For one (1) sample, the inspection checklist indicated a failed inspection, while the inspector erroneously documented and processed it as a passed inspection, meaning o reinspection was performed.
• For one (1) sample, the reinspection was not performed, and no documentation was found to verify the follow-up inspection.
We also noted one (1) additional instance out of forty (40) samples from Eligibility Cross Testing where the failed inspection did not have any record of a follow-up reinspection.
Cause:
The former Housing Inspector failed to follow the City’s policy for HQS inspections. As a result, the City identified key action items that were not being completed properly and timely by the inspector. To address these concerns, while the inspector was currently placed on leave, the City started to utilize the consulting firm Avant Garde, effective July 1, 2024, to assist with completing the required HQS inspections. Additionally, the Housing Manager and housing staff have taken on some inspection duties, while consultants continue to handle the majority of inspections until the personnel issue is resolved.
Effect or Potential Effect:
The City has not complied with the requirements of 24 CFR 982.405(b) – Housing Quality Standards Inspections.
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Repeat Finding from Prior Year, If Applicable:
Yes. See prior year finding 2023-007.
Recommendation:
We recommend that the City continue utilizing the consulting services provided by Avant Garde to complete the necessary HQS inspections while resolving the personnel issue. Additionally, the City should strengthen internal controls to ensure that future inspections are completed in a timely manner and in full compliance with City policies.
Views of Responsible Officials:
Management concurs.
2024-001 – Allowable Costs/Cost Principles – Internal Control and Compliance over Payroll Expenditures (Significant Deficiency)
Information on the Federal Program(s):
Assistance Listing Number: 14.218
Federal Program Name: Community Development Block Grants-Entitlement Grants Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: B-23-MC-06-0554
Assistance Listing Number: 14.871
Federal Program Name: Housing Voucher Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: CA120
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must:
• Be incorporated into the organization’s official records;
• Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort);
• Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and
Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies).
Condition:
Community Development Block Grants-Entitlement Grants Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the fourteen (14) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Housing Voucher Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the thirteen (13) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Cause:
Due to staff turnover, the City did not fully implement its adopted policies and procedures for relating payroll charges to grants. The City's efforts to address the prior year finding were not deemed sufficient, as it was unable to retrospectively perform reconciliations of actual hours worked for all employees. This limitation applied to both former employees who had left the City and certain current employees with time charges during parts of the fiscal year in supporting roles.
Effect or Potential Effect:
The City did not fully comply with the program’s requirements for allowable costs.
Questioned Costs:
Community Development Block Grants-Entitlement Grants Cluster
$53,625
Housing Voucher Cluster
$19,099
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2023-002.
Recommendation:
We recommend the City comply with federal regulation requiring that any employee funded by federal grant document the actual time they spend working on the grant’s objectives. Documentation must reflect “actual” time spent by employees on awards being charged. The City should develop and implement policies and procedures that ensure that employees’ compensation charged to federal programs reflect a contemporaneous or after-the-fact distribution of employees’ actual time and effort expended on federal programs. We also recommend the City enhance its internal controls over the payroll processes.
Views of Responsible Officials:
Management concurs.
2024-001 – Allowable Costs/Cost Principles – Internal Control and Compliance over Payroll Expenditures (Significant Deficiency)
Information on the Federal Program(s):
Assistance Listing Number: 14.218
Federal Program Name: Community Development Block Grants-Entitlement Grants Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: B-23-MC-06-0554
Assistance Listing Number: 14.871
Federal Program Name: Housing Voucher Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: CA120
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must:
• Be incorporated into the organization’s official records;
• Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort);
• Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and
Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies).
Condition:
Community Development Block Grants-Entitlement Grants Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the fourteen (14) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Housing Voucher Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the thirteen (13) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Cause:
Due to staff turnover, the City did not fully implement its adopted policies and procedures for relating payroll charges to grants. The City's efforts to address the prior year finding were not deemed sufficient, as it was unable to retrospectively perform reconciliations of actual hours worked for all employees. This limitation applied to both former employees who had left the City and certain current employees with time charges during parts of the fiscal year in supporting roles.
Effect or Potential Effect:
The City did not fully comply with the program’s requirements for allowable costs.
Questioned Costs:
Community Development Block Grants-Entitlement Grants Cluster
$53,625
Housing Voucher Cluster
$19,099
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2023-002.
Recommendation:
We recommend the City comply with federal regulation requiring that any employee funded by federal grant document the actual time they spend working on the grant’s objectives. Documentation must reflect “actual” time spent by employees on awards being charged. The City should develop and implement policies and procedures that ensure that employees’ compensation charged to federal programs reflect a contemporaneous or after-the-fact distribution of employees’ actual time and effort expended on federal programs. We also recommend the City enhance its internal controls over the payroll processes.
Views of Responsible Officials:
Management concurs.
2024-001 – Allowable Costs/Cost Principles – Internal Control and Compliance over Payroll Expenditures (Significant Deficiency)
Information on the Federal Program(s):
Assistance Listing Number: 14.218
Federal Program Name: Community Development Block Grants-Entitlement Grants Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: B-23-MC-06-0554
Assistance Listing Number: 14.871
Federal Program Name: Housing Voucher Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: CA120
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Total salaries charged to Federal awards (including extra service pay) are subject to the Standards of Documentation as described by 2 CFR §200.430(i). Per this section, salaries and wages charged to Federal awards must be based on records that accurately reflect the work performed. These records must:
• Be incorporated into the organization’s official records;
• Reasonably reflect the total activity for which the employee is compensating across all grant related and non-grant related activities (100% effort);
• Support the distribution of employee salary across multiple activities or cost objectives (for example, effort spent on multiple federal awards, spent on general/or administrative activities, vacation, sick leave, leave without pay, etc.); and
Utilize an "after-the-fact" review of the employee’s actual hours worked during the reporting period for identifying and correcting significant changes (as defined by the organization’s written policies).
Condition:
Community Development Block Grants-Entitlement Grants Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the fourteen (14) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Housing Voucher Cluster
During the audit period, the City has required all Housing Department staff, including administrative support staff, to fill out project activity timesheets reflecting the actual hours worked on the program. The City performed reconciliation on the staff payroll charges to reflect actual hours worked. However, not all staff members have fully complied with this policy. Payroll costs for the thirteen (13) out of forty (40) payroll samples tested were allocated to programs based on percentages provided by management. These allocations were not supported by approved time samples or updated cost allocation plan, nor were they reconciled to actual time spent on the various programs. Employee timesheets did not record the actual labor efforts expended on the grant.
Cause:
Due to staff turnover, the City did not fully implement its adopted policies and procedures for relating payroll charges to grants. The City's efforts to address the prior year finding were not deemed sufficient, as it was unable to retrospectively perform reconciliations of actual hours worked for all employees. This limitation applied to both former employees who had left the City and certain current employees with time charges during parts of the fiscal year in supporting roles.
Effect or Potential Effect:
The City did not fully comply with the program’s requirements for allowable costs.
Questioned Costs:
Community Development Block Grants-Entitlement Grants Cluster
$53,625
Housing Voucher Cluster
$19,099
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2023-002.
Recommendation:
We recommend the City comply with federal regulation requiring that any employee funded by federal grant document the actual time they spend working on the grant’s objectives. Documentation must reflect “actual” time spent by employees on awards being charged. The City should develop and implement policies and procedures that ensure that employees’ compensation charged to federal programs reflect a contemporaneous or after-the-fact distribution of employees’ actual time and effort expended on federal programs. We also recommend the City enhance its internal controls over the payroll processes.
Views of Responsible Officials:
Management concurs.
2024-002 – Reporting – Internal Control and Compliance over Reporting (Material Weakness)
Information of the Federal Program(s):
Assistance Listing Number: 14.218
Federal Program Name: Community Development Block Grants-Entitlement Grants Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number(s) and Award Year: B-23-MC-06-0554
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Community Development Block Grants-Entitlement Grants Cluster
The OMB Compliance Supplement requires that reports submitted to the Federal awarding agency include all activity of the reporting period, are supported by underlying accounting information and are presented in accordance with program requirements.
Pursuant to the Guidance on Cash on Hand Quarterly Report (replaced the Federal Financial Report, SF-425) and financial reporting requirements in the cooperative agreement provisions, and 2 CFR 200.327:
Quarterly reports: Program award recipients must submit Cash on Hand Quarterly Report reports to HUD quarterly, 30 days after the reporting period end date. Each report must cover all expenditures on the cooperative agreement from the start date of the reporting period to the reporting period end date. The following federal fiscal year quarter reporting period will be used for all quarterly reports, are due to HUD 30 days after the period end dates noted below:
Reporting Period Quarter 1: 7/1-9/30 Due Date of Report October 30
Reporting Period Quarter 2: 10/1-12/31 Due Date of Report January 30
Reporting Period Quarter 3: 1/1-3/31 Due Date of Report April 30
Reporting Period Quarter 4: 4/1-6/30 Due Date of Report July 30
Condition:
The City did not submit the required Cash on Hand Quarterly Report in a timely manner. The quarterly Cash on Hand Quarterly Report for the all of the four (4) reporting periods were submitted past deadline.
Federal Financial Report 7/1/2023 - 9/30/2023: Report Submission Deadline 10/20/2023, Report Submission Date 2/26/2024.
Federal Financial Report 10/01/2023-12/31/2023: Report Submission Deadline 1/20/2024, Report Submission Date 2/26/2024.
Federal Financial Report 01/01/2024 - 03/31/2024: Report Submission Deadline 4/30/2024, Report Submission Date 10/16/2024.
Federal Financial Report 04/01/2024 - 06/30/2024: Report Submission Deadline 7/30/2024, Report Submission Date 10/16/2024.
Cause:
Due to staff turnover, the City did not to consistently follow the program’s procedures to ensure that reports were submitted in a timely manner, in accordance with the timelines outlined in the Uniform Guidance.
Effect or Potential Effect:
Delay in filing the reports resulted in noncompliance with the compliance requirements.
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2023-005.
Recommendation:
We recommend that the City strengthen their report submission process and procedures to ensure all required reports are properly reviewed and approved and submitted timely.
Views of Responsible Officials:
Management concurs.
2024-003 – Subrecipient Monitoring – Internal Control and Compliance over Subrecipient Monitoring (Significant Deficiency)
Identification of the Federal Program:
Assistance Listing Number: 21.027
Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds
Federal Agency: Department of Treasury
Pass-Through Entity: N/A
Federal Award Number and Award Year: N/A
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
C.F.R. § 200.332 prescribes that the pass-through entity must conduct monitoring activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include:
1. Reviewing financial and performance reports required by the pass-through entity.
2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward.
3. Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521.
4. The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings.
Condition:
During the review of subrecipient monitoring records, several areas were noted for improvement:
• For two (2) out of three (3) subrecipients, the official agreement was not formally documented. One subrecipient agreement was executed via internal resolution and email approval; another subrecipient’s agreement lacked sufficient identification and award details, omitting key funding terminology.
• The City’s Subrecipient Monitoring Policy, which became effective on April 17, 2024, does not cover the period before the policy took effect. For all three (3) subrecipients, the City is unable to provide any documentation of the review of Financial and Performance Reports.
• The required Pre-Award Risk Assessments have not been provided for at least one subrecipient because the City’s Subrecipient Monitoring Policy, which became effective on April 17, 2024, does not cover the period before the policy took effect.
Cause:
These conditions appear to stem from transitional challenges as the City implemented the new Monitoring Policy on April 17, 2024. In addition, there is an opportunity to enhance the documentation processes by moving from informal approvals to more formal subrecipient agreements, and by ensuring that Pre-Award Risk Assessments are consistently documented and maintained.
Effect or Potential Effect:
The City was not able to do the necessary subrecipient monitoring activities resulted to internal control and compliance requirement finding.
Questioned Costs:
None.
Context:
See condition above for context of the finding.
Identification as a Repeat Finding, If Applicable:
Yes. See prior year finding 2023-006.
Recommendation:
We recommended the City to fully implement its Monitoring Policy by formalizing subrecipient agreements, strengthening internal controls, and establishing consistent processes for documenting Pre-Award Risk Assessments and Financial and Performance Reports.
Views of Responsible Officials:
Management concurs.
2024-004 – Special Tests – Internal Control and Compliance over Housing Quality Standards Inspections (Material Weakness)
Information on the Federal Program:
Assistance Listing Number: 14.871
Federal Program Name: Housing Voucher Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number and Award Year: CA120
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
24 CFR 982.405(b) states that the Public PHA (PHA) must inspect the unit leased to a family prior to the initial term of the lease, at least biennially during assisted occupancy, and at other times as needed, to determine if the unit meets Housing Quality Standards (HQS).
Condition:
During the Fail Inspection Testing, we found five (5) instances out of nine (9) in which the City did not conduct the Housing Quality Standards (HQS) failed inspection follow-up in a timely manner. Specifically:
• For two (2) samples, the reinspection was not performed within 30 days of the failed inspection, and the deficiencies were not confirmed to be resolved within the required timeframe.
• For one (1) sample, the inspection checklist indicated a failed inspection, while the inspector erroneously documented and processed it as a passed inspection, meaning o reinspection was performed.
• For one (1) sample, the reinspection was not performed, and no documentation was found to verify the follow-up inspection.
We also noted one (1) additional instance out of forty (40) samples from Eligibility Cross Testing where the failed inspection did not have any record of a follow-up reinspection.
Cause:
The former Housing Inspector failed to follow the City’s policy for HQS inspections. As a result, the City identified key action items that were not being completed properly and timely by the inspector. To address these concerns, while the inspector was currently placed on leave, the City started to utilize the consulting firm Avant Garde, effective July 1, 2024, to assist with completing the required HQS inspections. Additionally, the Housing Manager and housing staff have taken on some inspection duties, while consultants continue to handle the majority of inspections until the personnel issue is resolved.
Effect or Potential Effect:
The City has not complied with the requirements of 24 CFR 982.405(b) – Housing Quality Standards Inspections.
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Repeat Finding from Prior Year, If Applicable:
Yes. See prior year finding 2023-007.
Recommendation:
We recommend that the City continue utilizing the consulting services provided by Avant Garde to complete the necessary HQS inspections while resolving the personnel issue. Additionally, the City should strengthen internal controls to ensure that future inspections are completed in a timely manner and in full compliance with City policies.
Views of Responsible Officials:
Management concurs.
2024-004 – Special Tests – Internal Control and Compliance over Housing Quality Standards Inspections (Material Weakness)
Information on the Federal Program:
Assistance Listing Number: 14.871
Federal Program Name: Housing Voucher Cluster
Federal Agency: Department of Housing and Urban Development
Pass-Through Entity: N/A
Federal Award Number and Award Year: CA120
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
24 CFR 982.405(b) states that the Public PHA (PHA) must inspect the unit leased to a family prior to the initial term of the lease, at least biennially during assisted occupancy, and at other times as needed, to determine if the unit meets Housing Quality Standards (HQS).
Condition:
During the Fail Inspection Testing, we found five (5) instances out of nine (9) in which the City did not conduct the Housing Quality Standards (HQS) failed inspection follow-up in a timely manner. Specifically:
• For two (2) samples, the reinspection was not performed within 30 days of the failed inspection, and the deficiencies were not confirmed to be resolved within the required timeframe.
• For one (1) sample, the inspection checklist indicated a failed inspection, while the inspector erroneously documented and processed it as a passed inspection, meaning o reinspection was performed.
• For one (1) sample, the reinspection was not performed, and no documentation was found to verify the follow-up inspection.
We also noted one (1) additional instance out of forty (40) samples from Eligibility Cross Testing where the failed inspection did not have any record of a follow-up reinspection.
Cause:
The former Housing Inspector failed to follow the City’s policy for HQS inspections. As a result, the City identified key action items that were not being completed properly and timely by the inspector. To address these concerns, while the inspector was currently placed on leave, the City started to utilize the consulting firm Avant Garde, effective July 1, 2024, to assist with completing the required HQS inspections. Additionally, the Housing Manager and housing staff have taken on some inspection duties, while consultants continue to handle the majority of inspections until the personnel issue is resolved.
Effect or Potential Effect:
The City has not complied with the requirements of 24 CFR 982.405(b) – Housing Quality Standards Inspections.
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Repeat Finding from Prior Year, If Applicable:
Yes. See prior year finding 2023-007.
Recommendation:
We recommend that the City continue utilizing the consulting services provided by Avant Garde to complete the necessary HQS inspections while resolving the personnel issue. Additionally, the City should strengthen internal controls to ensure that future inspections are completed in a timely manner and in full compliance with City policies.
Views of Responsible Officials:
Management concurs.