2023-004 – Lack of Reporting (MW, NC)
Federal Program Title: Section 8 Housing Choice Vouchers
Federal Catalog Number: 14.871
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Reporting
Criteria: The Office of Management and Budget 2023 Compliance Supplement states that the following reports
are required to be submitted to the U.S. Department of Housing and Urban Development (HUD).
Financial Reports (OMB No. 2535-0107) – Financial Assessment Subsystem, FASS-PH. The Uniform
Financial Reporting Standards (24 CFR section 5.801) require PHAs to submit timely GAAP-based unaudited
and audited financial information electronically to HUD. Unaudited submissions are due no later than 60 days
after the agency’s FYE and audited submissions are due nine months after the agency’s FYE. The FASS-PH
system is one of HUD’s main monitoring and oversight systems for the HCVP.
Condition: The FASS- PH unaudited and audited submissions for FY 2021, 2022, 2023 and 2024 are
delinquent.
Cause: Turnover of staff in the Housing Authority and delay in recruitment. Lack of internal control over the
retention of program reports that form as the basis of the FASS-PH submissions.
Effect or Potential Effect: The City may be subject to a permanent reduction or offset of administrative fees in
an amount to be determined by HUD and demotion of the PHA’s SEMAP scoring one level.
Questioned Cost: None.
Context: The City obtained the notification from HUD dated on July 11, 2024. The City submitted the audited
financial statements for FY 2021 and 2022 on June 25, 2024 and December 20, 2024, respectively.
Statistical Sampling Validity: Not applicable.
Repeat of a Prior-Year Finding: 2018-007, 2019-005, 2020-001, 2021-002
Recommendation: We recommend the City establish policies and procedures that will ensure the submission
of unaudited and audited financial information to HUD on a timely basis.
Status: In Progress
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The City Controller’s Office drafted a grants policy that is currently under review
by City Management. Community development staff will ensure a succession plan is in place for any staff
turnover and for report preparation compliance.
Planned Implementation Date: September 2025
Responsible Person(s): City Manager, City Controller, and Community Development Director
2023-005 – Delayed Approval of Compensation Rates (SD)
Federal Program Title: Section 8 Housing Choice Vouchers
Assistance Listing Number: 14.871
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Allowable Costs and Cost Principles
Criteria: Per 2 CFR §200.430 of the Uniform Guidance, compensation for personnel services, including any
adjustments, must be based on documented and approved procedures in accordance with the organization’s
established policies. All changes to compensation must be approved and documented in a timely manner to
ensure compliance with both federal and non-federal funding requirements. The City uses personnel action forms
(PAF) to document changes to compensation. The PAF must be approved by authorized personnel in advance.
Condition: During the review of personnel costs, it was observed that changes in the compensation rates for
employees charged to the federally funded project were not approved in a timely manner. Documentation
showed delays in the authorization of salary adjustments, with compensation changes becoming effective before
formal approval by the City.
Cause: The City’s internal control processes for reviewing and approving compensation changes were not
followed promptly. There was a lack of procedures ensuring that salary adjustments were approved prior to the
effective date.
Effect or Potential Effect: Untimely approval of compensation changes increases the risk of inaccurate or
unallowable personnel costs being charged to the federal award. This may result in questioned costs, noncompliance
with federal regulations, and potential audit findings.
Questioned Cost: None.
Context: We selected four employees who worked on the program and in all cases, the PAF were authorized
much later than the effective date of the compensation change.
Statistical Sampling Validity: More than 50% of employees who work on the program were selected.
Repeat of a Prior-Year Finding: 2022-005.
Recommendation: The City should reinforce internal controls to ensure that all compensation changes are
reviewed and approved promptly. This should include:
Establishing a timeline for the approval of compensation adjustments.
Implementing procedures that prevent compensation changes from being applied until formal approval
is obtained.
Ensuring proper documentation of all approved salary changes is maintained.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation and has implemented hiring for temporary
work assignments in order to facilitate update.
Corrective Action Plan: The HR and payroll software will be updated by the City by December 2025.
Planned Implementation Date: December 2025
Responsible Person(s): City Manager
2023-006 – Lack of Oversight Due to Management Turnover (SD)
Federal Program Title: Section 8 Housing Choice Vouchers
Assistance Listing Number: 14.871
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Reporting/Special Tests and Provisions
Criteria: Under 2 CFR §200.303 of the Uniform Guidance, non-federal entities are required to establish and
maintain effective internal control over compliance, including appropriate oversight of federal programs to ensure
compliance with applicable laws, regulations, and the terms and conditions of the federal awards. Effective
internal controls rely on strong management oversight to ensure that compliance responsibilities are met, even
during periods of organizational change.
Condition: We noted that the entity experienced significant turnover in key management positions responsible
for overseeing compliance with federal awards during FY 2023. As a result, there was insufficient oversight of
federal programs and internal controls. Critical duties related to compliance monitoring, reporting, and financial
management were not performed adequately during the transition period, and there was a lack of continuity in
management practices.
Cause: The entity did not have adequate processes in place to ensure continuity of oversight and management
responsibilities during periods of turnover. There were no succession plans or interim measures to ensure that
compliance duties were properly transitioned and maintained.
Effect or Potential Effect: The lack of oversight during the management turnover period increases the risk of
non-compliance with federal award requirements. It can lead to gaps in monitoring, failure to meet reporting
deadlines, inaccurate financial management, and the potential for disallowed costs or other negative
consequences.
Questioned Cost: None.
Context: The deficiency was found during our testing of reporting and special tests and provisions.
Statistical Sampling Validity: Not applicable. No sampling was performed.
Repeat of a Prior-Year Finding: 2022-007.
Recommendation: The entity should establish policies and procedures to ensure continuity of oversight and
compliance monitoring during management transitions. This should include:
1. Developing a formal succession plan for key management positions responsible for overseeing federal
programs.
2. Implementing interim oversight measures, such as assigning temporary leadership or redistributing
compliance responsibilities during periods of transition.
3. Ensuring that new management receives timely training on compliance responsibilities and internal
controls related to federal awards.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The recommendations are included in the new grants policy. The City Manager
shall review and approve it for implementation by September 2025.
Planned Implementation Date: September 2025
Responsible Person(s): City Manager
2023-004 – Lack of Reporting (MW, NC)
Federal Program Title: Section 8 Housing Choice Vouchers
Federal Catalog Number: 14.871
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Reporting
Criteria: The Office of Management and Budget 2023 Compliance Supplement states that the following reports
are required to be submitted to the U.S. Department of Housing and Urban Development (HUD).
Financial Reports (OMB No. 2535-0107) – Financial Assessment Subsystem, FASS-PH. The Uniform
Financial Reporting Standards (24 CFR section 5.801) require PHAs to submit timely GAAP-based unaudited
and audited financial information electronically to HUD. Unaudited submissions are due no later than 60 days
after the agency’s FYE and audited submissions are due nine months after the agency’s FYE. The FASS-PH
system is one of HUD’s main monitoring and oversight systems for the HCVP.
Condition: The FASS- PH unaudited and audited submissions for FY 2021, 2022, 2023 and 2024 are
delinquent.
Cause: Turnover of staff in the Housing Authority and delay in recruitment. Lack of internal control over the
retention of program reports that form as the basis of the FASS-PH submissions.
Effect or Potential Effect: The City may be subject to a permanent reduction or offset of administrative fees in
an amount to be determined by HUD and demotion of the PHA’s SEMAP scoring one level.
Questioned Cost: None.
Context: The City obtained the notification from HUD dated on July 11, 2024. The City submitted the audited
financial statements for FY 2021 and 2022 on June 25, 2024 and December 20, 2024, respectively.
Statistical Sampling Validity: Not applicable.
Repeat of a Prior-Year Finding: 2018-007, 2019-005, 2020-001, 2021-002
Recommendation: We recommend the City establish policies and procedures that will ensure the submission
of unaudited and audited financial information to HUD on a timely basis.
Status: In Progress
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The City Controller’s Office drafted a grants policy that is currently under review
by City Management. Community development staff will ensure a succession plan is in place for any staff
turnover and for report preparation compliance.
Planned Implementation Date: September 2025
Responsible Person(s): City Manager, City Controller, and Community Development Director
2023-005 – Delayed Approval of Compensation Rates (SD)
Federal Program Title: Section 8 Housing Choice Vouchers
Assistance Listing Number: 14.871
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Allowable Costs and Cost Principles
Criteria: Per 2 CFR §200.430 of the Uniform Guidance, compensation for personnel services, including any
adjustments, must be based on documented and approved procedures in accordance with the organization’s
established policies. All changes to compensation must be approved and documented in a timely manner to
ensure compliance with both federal and non-federal funding requirements. The City uses personnel action forms
(PAF) to document changes to compensation. The PAF must be approved by authorized personnel in advance.
Condition: During the review of personnel costs, it was observed that changes in the compensation rates for
employees charged to the federally funded project were not approved in a timely manner. Documentation
showed delays in the authorization of salary adjustments, with compensation changes becoming effective before
formal approval by the City.
Cause: The City’s internal control processes for reviewing and approving compensation changes were not
followed promptly. There was a lack of procedures ensuring that salary adjustments were approved prior to the
effective date.
Effect or Potential Effect: Untimely approval of compensation changes increases the risk of inaccurate or
unallowable personnel costs being charged to the federal award. This may result in questioned costs, noncompliance
with federal regulations, and potential audit findings.
Questioned Cost: None.
Context: We selected four employees who worked on the program and in all cases, the PAF were authorized
much later than the effective date of the compensation change.
Statistical Sampling Validity: More than 50% of employees who work on the program were selected.
Repeat of a Prior-Year Finding: 2022-005.
Recommendation: The City should reinforce internal controls to ensure that all compensation changes are
reviewed and approved promptly. This should include:
Establishing a timeline for the approval of compensation adjustments.
Implementing procedures that prevent compensation changes from being applied until formal approval
is obtained.
Ensuring proper documentation of all approved salary changes is maintained.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation and has implemented hiring for temporary
work assignments in order to facilitate update.
Corrective Action Plan: The HR and payroll software will be updated by the City by December 2025.
Planned Implementation Date: December 2025
Responsible Person(s): City Manager
2023-006 – Lack of Oversight Due to Management Turnover (SD)
Federal Program Title: Section 8 Housing Choice Vouchers
Assistance Listing Number: 14.871
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Reporting/Special Tests and Provisions
Criteria: Under 2 CFR §200.303 of the Uniform Guidance, non-federal entities are required to establish and
maintain effective internal control over compliance, including appropriate oversight of federal programs to ensure
compliance with applicable laws, regulations, and the terms and conditions of the federal awards. Effective
internal controls rely on strong management oversight to ensure that compliance responsibilities are met, even
during periods of organizational change.
Condition: We noted that the entity experienced significant turnover in key management positions responsible
for overseeing compliance with federal awards during FY 2023. As a result, there was insufficient oversight of
federal programs and internal controls. Critical duties related to compliance monitoring, reporting, and financial
management were not performed adequately during the transition period, and there was a lack of continuity in
management practices.
Cause: The entity did not have adequate processes in place to ensure continuity of oversight and management
responsibilities during periods of turnover. There were no succession plans or interim measures to ensure that
compliance duties were properly transitioned and maintained.
Effect or Potential Effect: The lack of oversight during the management turnover period increases the risk of
non-compliance with federal award requirements. It can lead to gaps in monitoring, failure to meet reporting
deadlines, inaccurate financial management, and the potential for disallowed costs or other negative
consequences.
Questioned Cost: None.
Context: The deficiency was found during our testing of reporting and special tests and provisions.
Statistical Sampling Validity: Not applicable. No sampling was performed.
Repeat of a Prior-Year Finding: 2022-007.
Recommendation: The entity should establish policies and procedures to ensure continuity of oversight and
compliance monitoring during management transitions. This should include:
1. Developing a formal succession plan for key management positions responsible for overseeing federal
programs.
2. Implementing interim oversight measures, such as assigning temporary leadership or redistributing
compliance responsibilities during periods of transition.
3. Ensuring that new management receives timely training on compliance responsibilities and internal
controls related to federal awards.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The recommendations are included in the new grants policy. The City Manager
shall review and approve it for implementation by September 2025.
Planned Implementation Date: September 2025
Responsible Person(s): City Manager