Audit 40270

U.S. Department of Housing & Urban Development Program Name: Public and Indian Housing AL Number: 14.850 Material Weakness, Procurement and Suspension and Debarment Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that procurement policies are implemented and functioning as intended. Management must monitor activities under federal awards to assure compliance with federal requirements. Condition: The City implemented procurement policies that conforms with applicable federal and state laws. However, the City?s internal controls over micro-purchases were not functioning as intended. Context: During our testing, we examined 40 purchases and determined that 10 purchases in the micro-purchases threshold did not follow the City?s policy. Expenditures were pre-audited prior to payment, however purchase orders were not completed as required by the City?s policy. Effect: Purchases may be made without the proper procurement approvals. Cause: Due to the turnover in the housing department, there were instances where a proper purchase order was not created for approval. Questioned Cost: None. This finding represents an internal control issue; therefore, questioned costs are not applicable. Recommendation: The City should have a system in place to ensure that the procurement policies are implemented and functioning as intended. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

U.S. Department of Housing & Urban Development Program Name: Public and Indian Housing AL Number: 14.850 Material Non-Compliance Material Weakness, Eligibility Special Tests and Provisions Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that applicants have all required documentation in their file. In accordance with 24 CFR sections 960.202 through 960.208, the City must establish, adopt, and follow policies for admission of tenants as it relates to the Public Housing waiting list. In accordance with 24 CFR Part 5 Subpart F, the City must maintain documentation to support tenant eligibility. Condition: The Public Housing Department did not follow procedures to ensure the proper eligibility determination were made and documented. Context: Of the 319 applicants during the current year valued at $768,137, we examined 60 (valued at $220,760) and determined that 45 (75% valued at $165,570) applicants were not supported with case documentation to confirm eligibility. We also determined that three applicants (5% valued at $11,038) had inconsistent documentation supporting eligibility determination in the case file. There were four applicants (7% valued at $14,718) missing documentation to support that the tenants were selected from the public housing waiting list. Upon further review, these seven applicants were deemed eligible. Effect: Participants could receive benefits for which they are not eligible. Cause: Weakness in implementation of controls over eligibility procedures. Due to the turnover in the housing department, the City failed to obtain or retain the completed eligibility documentation. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. The sample results identified $165,570 in known questioned costs. Recommendation: Management should adhere to the program?s policy and maintain proper eligibility documentation in the applicant?s file. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

U.S. Department of Housing & Urban Development Program Name: Public and Indian Housing AL Number: 14.850 Material Weakness, Procurement and Suspension and Debarment Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that procurement policies are implemented and functioning as intended. Management must monitor activities under federal awards to assure compliance with federal requirements. Condition: The City implemented procurement policies that conforms with applicable federal and state laws. However, the City?s internal controls over micro-purchases were not functioning as intended. Context: During our testing, we examined 40 purchases and determined that 10 purchases in the micro-purchases threshold did not follow the City?s policy. Expenditures were pre-audited prior to payment, however purchase orders were not completed as required by the City?s policy. Effect: Purchases may be made without the proper procurement approvals. Cause: Due to the turnover in the housing department, there were instances where a proper purchase order was not created for approval. Questioned Cost: None. This finding represents an internal control issue; therefore, questioned costs are not applicable. Recommendation: The City should have a system in place to ensure that the procurement policies are implemented and functioning as intended. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

U.S. Department of Housing & Urban Development Program Name: Public and Indian Housing AL Number: 14.850 Material Non-Compliance Material Weakness, Eligibility Special Tests and Provisions Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that applicants have all required documentation in their file. In accordance with 24 CFR sections 960.202 through 960.208, the City must establish, adopt, and follow policies for admission of tenants as it relates to the Public Housing waiting list. In accordance with 24 CFR Part 5 Subpart F, the City must maintain documentation to support tenant eligibility. Condition: The Public Housing Department did not follow procedures to ensure the proper eligibility determination were made and documented. Context: Of the 319 applicants during the current year valued at $768,137, we examined 60 (valued at $220,760) and determined that 45 (75% valued at $165,570) applicants were not supported with case documentation to confirm eligibility. We also determined that three applicants (5% valued at $11,038) had inconsistent documentation supporting eligibility determination in the case file. There were four applicants (7% valued at $14,718) missing documentation to support that the tenants were selected from the public housing waiting list. Upon further review, these seven applicants were deemed eligible. Effect: Participants could receive benefits for which they are not eligible. Cause: Weakness in implementation of controls over eligibility procedures. Due to the turnover in the housing department, the City failed to obtain or retain the completed eligibility documentation. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. The sample results identified $165,570 in known questioned costs. Recommendation: Management should adhere to the program?s policy and maintain proper eligibility documentation in the applicant?s file. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.