2024-006: Housing Quality Standards Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Section 8 Choice Housing Vouchers Assistance Listing Number: 14.871 Federal Award Identification Number and Year: CA103AF0154-0160, CA103AFR323, CA103EH0005-0006, CA103VO0201-0206, CA103VO0208-0211, and CA103VOPR23; All 2024 Award Period: July 1, 2023 – June 30, 2024 Compliance Requirement Affected: N Special Tests and Provisions Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: The Public Housing Agency (PHA) must inspect the unit leased to a family at least biennially to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). For units under a Housing Assistance Payments (HAP) contract that fail to meet HQS, the PHA must require the owner to correct any life threatening deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract (24 CFR sections 982.158(d) and 982.404). Condition: For one of the HQS reinspections tested, the City-prepared reinspection listing indicated that the reinspection occurred within the required timeframe. However, upon review of the tenant file and underlying support, it was determined that the reinspection did not take place. For two of the HQS failed inspections tested, the City should have abated payments in accordance with the City's Administrative Plan due to owner failure to correct deficiencies in a timely manner. No documentation was maintained to explain why abatement did not occur or whether follow-up inspections were properly extended. Questioned Costs: Below $25,000. Context: 5 HQS reinspections out of a population of 15, and 8 failed inspections out of a population of 32, were selected for testing. Cause: Due to staff turnover in the Housing Department, the same employee who selected the HQS re-inspections/failed inspections for testing, also performed the re-inspections/failed inspections. There was no indication of another person reviewing the documentation to ensure completeness and compliance with the requirements. Effect: The City was not in compliance with the requirements of Housing Quality Standards for inspections and enforcement. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City review and update internal controls to ensure that supporting documentation for re-inspections and failed inspections is complete and properly reviewed and maintained. Views of Responsible Officials and Corrective Action: Management agrees with this finding. The RBHA is updating the administrative policy which includes a timeline for inspection follow-up within 30 days and scheduling re-inspections within five business days from the date requested. The revised policies include a description of the types of inspections to be conducted by the Housing Authority, the steps that will be taken when units fail, and identifies conditions which are considered to be life-threatening. The current RBHA staff will review and implement the revised policies to ensure inspections are completed in a timely manner and proper follow up is administered. The Housing Manager is already implementing protocols for the review and approval of inspections conducted by staff to ensure compliance. In addition, quality control inspections are regularly conducted by a Team Lead, a process that is also required for the annual Section Eight Management Assessment Program (SEMAP) submitted to HUD. The updated administrative policies include a chapter for the National Standards for the Physical Inspection of Real Estate (NSPIRE) that will sunset and replace the Housing Quality Standards (HQS) inspection process scheduled for February 1, 2027.
2024-007: Annual Reporting Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Section 8 Choice Housing Vouchers Assistance Listing Number: 14.871 Federal Award Identification Number and Year: CA103AF0154-0160, CA103AFR323, CA103EH0005-0006, CA103VO0201-0206, CA103VO0208-0211, and CA103VOPR23; All 2024 Award Period: July 1, 2023 – June 30, 2024 Compliance Requirement Affected: L. Reporting Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirements: 24CFR § 902.33 Financial Reporting requirements: (b) Annual unaudited financial information report filing dates. The unaudited financial information to be submitted to HUD in accordance with paragraph (a) of this section must be submitted to HUD annually, no later than 2 months after the PHA's fiscal year end, with no penalty applying until the 16th day of the 3rd month after the PHA's fiscal year end, in accordance with § 902.62. Also, 24 CFR section 5.801 (c) (1) requires that housing agencies submit timely GAAP-based unaudited and audited financial information electronically to HUD no later than 60 days after the end of the fiscal year. Condition: The City submitted their Financial Data Schedule (FDS), 3 months after the due date imposed by the federal government. Additionally, due to turnover in the Housing Department, we were unable to observe that the report and underlying documentation were reviewed prior to submission. Questioned Costs: None noted. Context: The City submits approximately 4 different reports to HUD with varying frequency and due dates throughout the year. Of these 4 reports, the FDS mentioned above, was the only report that was not submitted within the required due date. Cause: Due to staff turnover in the Housing Department, City staff were unable to meet the deadline to submit unaudited financial information. Therefore, the FDS was not submitted until 11/15/2024. Effect: The City was late in their submission of the FDS. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City review and update internal controls to ensure that the FDS is completed and submitted in a timely manner. Views of Responsible Officials and Corrective Action: Management agrees with this finding. The City has contracted a financial consultant to prepare and submit financials monthly and annually. Internally, RBHA staff has established timelines for data preparation in advance of FDS deadlines to ensure the consultant is prepared to submit the financial reports in a timely manner. Staff has set ongoing calendar reminders to monitor and coordinate with all the parties involved the FDS submissions.
2024-008: Payroll Costs Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Section 8 Choice Housing Vouchers Assistance Listing Number: 14.871 Federal Award Identification Number and Year: CA103AF0154-0160, CA103AFR323, CA103EH0005-0006, CA103VO0201-0206, CA103VO0208-0211, and CA103VOPR23; All 2024 Award Period: July 1, 2023 – June 30, 2024 Compliance Requirement Affected: AB Activities Allowed /Allowable Costs Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: 2 CFR § 200.430: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: The City did not maintain supporting time and effort documentation for certain employees who partially charged their time to the program. The City used a budgeted payroll allocation to charge employee amounts to the program and did not true-up the budgeted payroll allocation to actual time and effort. Questioned Costs: Costs not supported by time and effort documentation totaled $32,257 for the year. Context: 5 of the 20 payroll transactions tested were not supported by time and effort documentation. Due to system limitations, the City could not produce supervisor timesheet approvals that occurred through the electronic workflow process in the City’s financial system for 7 of the 20 payroll transactions. Total payroll costs charged to this grant program for the year were $516,331. Cause: City used budgeted percentages to determine the allocation of payroll costs for certain employees who provided services to the grant on a part-time basis. The City did not true-up the budgeted amounts to actuals as part of their year-end closing process. In addition, due to system limitations, the City’s ERP system was unable to generate a report evidencing the electronic approval of specific time sheets by the employee’s supervisor. Effect: Unsupported payroll charges for time and effort pertaining to grant programs may be disallowed by the grantor. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City review and update internal controls to ensure that supporting documentation for allowable time charges to grant programs is properly maintained. Views of Responsible Officials and Corrective Action: Management agrees with this finding. Staff has updated timekeeping for individuals charging partial time to the Housing Section 8 program to track actual hours spent rather than through budget allocation. Staff has in addition identified a method by which the City can produce supervisor approval documentation through the financial system’s electronic workflow.
2024-009: Internal Control Documentation Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Section 8 Choice Housing Vouchers Assistance Listing Number: 14.871 Federal Award Identification Number and Year: CA103AF0154-0160, CA103AFR323, CA103EH0005-0006, CA103VO0201-0206, CA103VO0208-0211, and CA103VOPR23; All 2024 Award Period: July 1, 2023 – June 30, 2024 Compliance Requirements Affected: E. Eligibility, L-Reporting, and N-Special Tests and Provisions Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2CFR § 200.303 Internal controls require a recipient of federal awards to: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Evidence of the Housing Manager’s review and approval of certain internal control processes and the timing of those reviews was not clearly documented. Questioned Costs: None noted. Context: 40 tenant files were selected to test for various compliance requirements. While the tenant files contained sufficient evidence that the City was in compliance with grant requirements, documentation of the review and approval process for HUD Form 50058, rent reasonableness calculations, and the Housing Authority application (with underlying applicant information) prior to approval of the applicant was not clearly documented. Cause: The City's applicant examination process includes a step where the Housing Manager reviews tenant files prepared by the Housing Specialists. However, the City was unable to provide documentation evidencing the Housing Manager’s review and approval process. Effect: Breakdowns in internal control over compliance may lead to ineligible applicants receiving inaccurate benefits. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City establish procedures to ensure that the review and approval processes are clearly documented within each tenant file. Views of Responsible Officials and Corrective Action: Management agrees with this finding. The RBHA will establish procedures to monitor and ensure proper file review. RBHA has created a new checklist for a supervising team member to review intake files for accuracy, to document approval, and to release the Housing Assistance Payment. RBHA will maintain records of the signed checklist for each tenant file.
2024-010: Monthly Reporting Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Section 8 Choice Housing Vouchers Assistance Listing Number: 14.871 Federal Award Identification Number and Year: CA103AF0154-0160, CA103AFR323, CA103EH0005-0006, CA103VO0201-0206, CA103VO0208-0211, and CA103VOPR23; All 2024 Award Period: July 1, 2023 – June 30, 2024 Compliance Requirement Affected: L. Reporting Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: 2CFR § 200.303 Internal controls require a recipient of federal awards to: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City's system of internal control includes a process where grant management staff prepare, review and approve monthly reports for upload to HUD’s VMS system. However, the City was unable to provide documentation about the employee who performed each process or when each process was performed. In addition, the City did not retain documentation that supported the balances reported as part of the original submission to the VMS. Questioned Costs: None noted. Context: The 3 monthly reports selected for testing did not have any evidence of who reviewed and approved the reports prior to submission. Additionally, we were unable to trace certain significant information contained in the 3 monthly reports to supporting underlying data due to the City not retaining GL reports used to prepare the reports. Cause: Due to staff turnover in the Housing Department, evidence of internal controls over compliance and the supporting underlying data were not retained. Effect: Breakdowns in the internal controls over compliance may lead to inaccurate information being reported to HUD. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City review and update internal controls over the completion and submission of monthly program reports to ensure the accuracy of the information being reported and to ensure that supporting underlying documentation is properly retained. As part of this process, the City should consider utilizing members of the Finance Department as the monthly reports contain certain financial information. Views of Responsible Officials and Corrective Action: Management agrees with this finding. RBHA has established a process by which Housing will copy Finance on monthly VMS reports provided to the financial consultant for the VMS submissions; this will both document timing and ensure additional review. In addition, RBHA and Finance are coordinating to revise the City’s account structure for Housing-related expenses. Better aligning the City’s account setup with VMS reporting requirements will help ensure that VMS submissions are adequately supported and tie cleanly to the City’s General Ledger.