HCVP Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871 and 14.879 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: The Authority may devise their own application forms that are filled out by the Authority staff during an interview with the tenant. The head of the household signs (a) one or more release forms to allow the PHA to obtain information from third parties; (b) a federally prescribed general release form for employment information; and (c) a privacy notice. Under some circumstances, other members of the family are required to sign these forms (24 CFR sections 5.212 and 5.230). The PHA must do the following: (1) As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 982.516). (2) For both family income examinations and reexaminations, obtain and document in the family file third party verification of (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income-based rent (24 CFR section 982.516). (3) Determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification in accordance with 24 CFR Part 5 Subpart F (24 CFR section 5.601 et seq.) (24 CFR sections 982.201, 982.515, and 982.516). (4) Use the Enterprise Income Verification (EIV) system in its entirety to verify tenant employment and income information during mandatory reexaminations of family composition and income in accordance with 24 CFR 5.233; and reduce administrative and subsidy payment errors in accordance with 24 CFR 5.236 and other administrative guidance issued by HUD. (5) Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification (24 CFR section 982.516). 2024 – 002 – HCVP Eligibility Condition: During the testing of the Housing Choice Voucher Program tenant files, certain eligibility deficiencies were noted. Of the tenant files provided, auditor noted the following items: • 5 instances where the file was missing the Section 214 status form • 7 instances where the income information from the 50058 did not agree to the supporting documentation • 2 instances where the file was missing the HUD-9886 authorization form • 3 instances where EIV could not be located • 3 instances where the Authority did not review the information on an annual basis • 4 instances where verified allowable expenses with support in the file were not included on the 50058 • 10 instances where the HAP was calculated incorrectly or not supported by information in the file • 11 instances where the internal control over eligibility was not documented Questioned costs: Known: $1,087 Context: Out of 60 eligibility files tested, 21 files contained errors as noted above Cause: The Authority failed to provide adequate monitoring and oversight to ensure compliance with HUD rules and regulations, as well as their administrative policy. Effect: The Authority is not in compliance with federal regulations regarding eligibility requirements. Repeat Finding: Yes Recommendation: We recommend management should designate one person to review a sample of the files that have been recertified each month, to determine if the tenant files were prepared in accordance with internal policies and until the compliance deficiencies have been corrected. Views of responsible officials: There is no disagreement with the audit finding.
VMS Reporting Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871 and 14.879 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: The Authorities administering the Housing Choice Voucher (HCV) Program are required to accurately report leasing and expenditure data in HUD’s Voucher Management System (VMS). Under 24 CFR section 982.158(a), the Authority must maintain complete and accurate accounts and records for all program transactions, including HAP expenses and unit months leased. In accordance with HUD’s Uniform Financial Reporting Standards at 24 CFR part 5, subpart H, and HUD’s VMS reporting requirements issued through PIH Notices, the Authority must submit complete, accurate, and timely VMS data each month and retain documentation supporting all reported figures. Additionally, the Authority must ensure that all VMS submissions reflect actual HAP expenses and leasing activity for the reporting month, and that any revisions or corrections are submitted promptly in accordance with HUD guidance (24 CFR section 982.152(d) and applicable PIH Notices governing VMS reporting). Condition: During the testing of the Housing Choice Voucher Program VMS report, support was unable to be provided to back up the VMS report submitted to HUD Questioned costs: Unable to determine. Context: The VMS report was not backed up with supporting documentation. Cause: The Authority does not have adequate internal controls designed to ensure that requirements are met. Effect: The Authority does not have proper controls over the reporting process. Repeat Finding: No Recommendation: We recommend that the Authority designate an individual to review VMS monthly including the prior periods for adjustments. Views of responsible officials: There is no disagreement with the audit finding.
Interfund Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster and Public Housing Operating Fund Assistance Listing Number: 14.871;14.879 and 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: The Authority must ensure that all financial transactions, including interfund activity, are recorded accurately, supported by documentation, and compliant with federal financial management requirements. Under 2 CFR section 200.302, the Authority is required to maintain financial management systems that provide for accurate, current, and complete disclosure of financial results for all federally assisted programs. In addition, 2 CFR section 200.303 requires the Authority to implement internal controls to safeguard federal funds and ensure that transactions are properly authorized and recorded. Interfund loans, transfers, and reimbursements must be supported by adequate documentation, consistent with the Authority’s cost allocation plan, and compliant with the cost principles in 2 CFR part 200, subpart E. Costs charged to the Housing Choice Voucher (HCV) Program or Public Housing Program must be allowable, reasonable, necessary, and allocable under 2 CFR section 200.405. Any temporary use of HCV or Public Housing funds for non HCV purposes, or vice versa, must be fully documented and promptly reimbursed to the benefiting program. PHAs must also maintain complete and accurate accounts and records for all program transactions in accordance with 24 CFR section 982.158(a). The PHA must ensure that all interfund transactions are timely reconciled, supported by appropriate documentation, and accurately reflected in the PHA’s financial statements and HUD reporting systems, including the Financial Data Schedule (FDS) submitted under 24 CFR part 5, subpart H. Condition: During the audit, interfund transactions between program funds were identified, which lacked adequate documentation and approval. The Authority could not provide support for the interfund balance transfers and reimbursements between the programs. Questioned costs: $5,660,183 (ALN 14.850); $1,714,685 (ALN 14.871); $82,702 (ALN 14.879); $67,870 (ALN 14.EHV) Context: The Authority is not in compliance with federal regulations regarding transfers of operating funds and maintaining adequate documents per the compliance requirements. Cause: The Authority does not have adequate internal controls designed to ensure that requirements were being met. Effect: The Authority does not have proper controls over the reporting process. Repeat Finding: Yes 2024 – 004 – Interfund Recommendation: We recommend management should create processes to track interfunds and transfers as well as designate an individual to review and approve these transactions. Additionally, the Authority should begin the process of reimbursing the respective programs. Views of responsible officials: There is no disagreement with the audit finding.
Waiting List Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871 and 14.879 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: The Authority must have written policies in its HCVP administrative plan for selecting applicants from the waiting list and the Authority documentations must show that the Authority follows these policies when selecting applicants for admission from the waiting list. Except as provided in 24 CFR section 982.203 Special admission (nonwaiting list), all families admitted to the program must be selected from the waiting list. “Selection” from the waiting list generally occurs when the Authority notifies a family whose name reaches the top of the waiting list to come in to verify eligibility for admission (24 CFR sections 5.410, 982.54(d), and 982.201 through 982.207). Condition: During the testing of the Housing Choice Voucher Program tenant files, certain selection from the Waiting List deficiencies were noted as summarized below: • Waiting List New Tenants: 7 instances where the internal control over eligibility was not documented • Waiting List Top of List: No documentation was provided to evidence the control was executed. Unable to verify operating effectiveness. Questioned costs: N/A Context: Out of 60 top of list files tested, 60 contained the errors noted above. Out of 24 New Tenant Files, 7 contained the errors noted above. Cause: The Authority does not have adequate internal controls designed to ensure that requirements were being met. Effect: The Authority does not have proper controls over the waitlist pull and new admissions process. Repeat Finding: No Recommendation: We recommend that the Authority designate an individual to maintain the waiting list and track all correspondence with potential tenants. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 006 – Rent Reasonableness Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871 and 14.879 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: The Authority’s administrative plan must state the method used by the Authority to determine that the rent to owner is reasonable in comparison to rent for other comparable unassisted units. The Authority’s determination must consider unit attributes such as the location, quality, size, unit type, and age of the unit, and any amenities, housing services, maintenance, and utilities provided by the owner. The Authority must determine that the rent to the owner is reasonable at the time of initial leasing. Also, the Authority must determine reasonable rent during the term of the contract (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a 10 percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: During the testing of the Housing Choice Voucher Program tenant files, certain special provision compliance deficiencies were noted. Of the 84 files tested, 2 instances were noted where the rent reasonableness was not performed. Questioned costs: N/A Context: During our testing, we reviewed 84 tenant files that required rent reasonableness; 2 tenant files contained errors as noted. Cause: The Authority failed to determine the rent reasonable before the tenants' effective date Effect: The Authority is not in compliance with federal regulations regarding the determination of reasonable rent. Inaccurate data could cause Authority to be paying an unfair rent to a landlord. Repeat Finding: No Recommendation: We recommend that the Authority designate an individual to review tenant files to determine if a rent reasonableness has been performed and was completed in a timely manner. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 007 – Inspections Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871 and 14.879 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Material Weakness in Internal Control Over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: For units under HAP contract that fail to meet HQS, the Authority must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified Authority approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the Authority must abate HAP payments beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as a result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the PHA must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). In addition, all HCV units are required to be inspected annually. The Authority must inspect the unit leased to a family at least annually to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The Authority must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). Condition: During the testing of the Housing Choice Voucher Program tenant files, certain special provision compliance deficiencies were noted as summarized below. Of the 120 files tested: • 3 instances where the Authority did not perform an annual inspection • 4 instances where repairs were not completed within the required correction period of 30 days for deficiencies • 2 instances where the repairs were not completed within the required correction period of 24 hours for life threatening deficiencies • 60 instances where the internal control over HQS enforcement was not documented Questioned costs: Known: $3,706 Context: Of the 60 files tested for annual HQS inspections, we noted that 3 had exceptions. Of the 60 files tested for HQS enforcement, 60 inspections had exceptions. Cause: The Authority does not have adequate internal controls designed to ensure that inspection requirements were being met. Effect: The Authority is not in compliance with inspection requirements. Repeat Finding: Yes 2024 – 007 – Inspections Recommendation: We recommend that the Authority designate an individual to review the third party inspection reports and track inspections and their timing. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 008 - Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Public Housing Operating Fund Assistance Listing Number: 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Most PHAs devise their own application forms that are filled out by the PHA staff during an interview with the tenant. The head of household signs (a) a certification that the information provided to the PHA is correct; (b) one or more release forms to allow the PHA to get information from third parties; (c) a federally prescribed general release form for employment information; and (d) a privacy notice. Under some circumstances, other members of the family may be required to sign these forms (24 CFR sections 5.212, 5.230, and 5.601 through 5.615). The PHA must do the following: (1) As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 960.259). (2) For both family income examinations and reexaminations, obtain and document in the family file third party verification of (a) reported family annual income, (b) the value of assets, (c) expenses related to deductions from annual income, and (d) other factors that affect the determination of adjusted income or income-based rent (24 CFR section 960.259). (3) Determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification in accordance with 24 CFR Part 5, Subpart F (24 CFR sections 5.601 et seq., and 24 CFR sections 960.253, 960.255, and 960.259). (4) Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification (24 CFR sections 960.253, 960.257, and 960.259). Condition: During the testing of the Public Housing Program tenant files, a compliance deficiency was noted. Of the 30 tenant files provided, auditor noted the following items: • 1 instance where the income reported in the HUD-50058 was not supported • 2 instances where the rent change form (IC) was missing from the file Questioned costs: N/A 2024 – 008 - Eligibility Context: Out of 30 PH tenant files, 2 tenant files contained errors as noted above. Cause: The Authority failed to provide adequate monitoring and oversight to ensure compliance with HUD rules and regulations, as well as their ACOP. Effect: The Authority is not in compliance with federal regulations regarding the verification of the tenants' income and maintaining adequate documents per the compliance requirements. Repeat Finding: Yes Recommendation: We recommend management should designate one person to review a sample of the files that have been recertified each month, to determine if the tenant files were prepared in accordance with internal policies and until the compliance deficiencies have been corrected Views of responsible officials: There is no disagreement with the audit finding.
2024 – 009 – Reporting REAC Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster and Public Housing Operating Fund Assistance Listing Number: 14.871;14.879 and 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: 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. The FASS-PH system is one of HUD's main monitoring and oversight systems of the Authority. Condition: The Authority is required to submit an unaudited REAC to HUD within 2 months (August 31, 2024) and audited submission within 9 months (March 31, 2025) of their fiscal year end. The Authority submitted multiple unaudited submissions and has not submitted an audited. Questioned costs: N/A Context: The Authority failed to submit the audited REAC submission within the required time. Cause: The Authority failed to provide adequate monitoring of the deadline submission. Effect: The Authority failed to submit information to HUD in a timely manner. Repeat Finding: Yes Recommendation: We recommend that the Authority designate an individual to provide oversight of the REAC submission. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 010 – Allowable Cost - HCVP Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Number: 14.871 and 14.879 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: Under 2 CFR part 200, subpart E (Cost Principles), PHAs must ensure that all program expenditures charged to the Housing Choice Voucher (HCV) Program are allowable, reasonable, necessary, and properly supported. Specifically, 2 CFR sections 200.302 and 200.303 require the PHA to maintain effective financial management systems and internal controls to ensure that costs are accurately recorded, supported by documentation, and compliant with federal requirements. Payroll costs must be supported by appropriate time and effort documentation in accordance with 2 CFR section 200.430, and all cash disbursements must be supported by invoices, approvals, and evidence that the expenditures benefit the HCV Program. The PHA must ensure that all payroll charges, vendor payments, and other cash disbursements allocated to the HCV Program are supported by adequate documentation, properly approved, and consistent with the PHA’s cost allocation plan, financial policies, and federal cost principles. All expenditures must be recorded accurately and retained in accordance with 24 CFR section 982.158(a), which requires PHAs to maintain complete and accurate accounts and records for all program transactions. Condition: During the testing of the Housing Voucher Cluster we noted the following errors Cash Disbursements • Of the 40 invoices that we reviewed, we noted a total of 40 invoices did not have a documented approval Payroll Disbursement Testing • 7 timecards were noted as not having been approved • 8 timecards could not be provided • Information for 3 employees could not be provided Questioned costs: N/A Context: Cash Disbursements Out of the 40 invoices that we reviewed, we noted a total of 40 invoices without written approval on the invoices. Payroll Disbursements Out of the 40 timecards files that we reviewed, we noted 10 timecard files that contained errors as noted. Cause: The Authority failed to follow the internal controls process that was designed to ensure that requirements were being met. 2024 – 010 – Allowable Cost - HCVP Effect: The Authority does not have proper controls over the payroll and cash disbursement approval process. Repeat Finding: No Recommendation: We recommend that the Authority designate an individual to review both cash disbursements and payroll disbursements for all program expenditures. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 011 - Allowable Cost – Public Housing Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Public Housing Operating Fund Assistance Listing Number: 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: Project-specific operating expenses include, but are not limited to, direct administrative costs, utilities costs, maintenance costs (maintenance must be either decentralized, or if centralized, recovered via fee-for service), tenant services, protective services, general expenses, non-routine or capital expenses, and other PHA- or HUD-identified costs which are project-specific for management purposes. Condition: During the testing of the Public Housing Operating Fund we noted the following errors Cash Disbursements • Of the 40 invoices that we reviewed, we noted a total of 30 invoices did not have a documented approval • Of the 40 invoices that we reviewed, we noted a total of 2 expenses that did not have supporting documentation Payroll Disbursement Testing • 4 timecards were noted as not having been approved • 4 timecards could not be provided • Information for 2 employees could not be provided Questioned costs: Unable to determine. Context: Cash Disbursements Out of the 40 invoices that we reviewed, we noted a total of 30 invoices without written approval on the invoices. Payroll Disbursements Out of the 40 timecards files that we reviewed, we noted 7 timecard files that contained errors as noted. 2024 – 011 - Allowable Cost – Public Housing Cause: The Authority failed to follow the internal controls process that was designed to ensure that requirements were being met. Effect: The Authority does not have proper controls over the payroll and cash disbursement processing. Repeat Finding: No Recommendation: We recommend that the Authority designate an individual to review both cash disbursements and payroll disbursements for all program expenditures. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 012 - Procurement and Suspension and Debarment Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Public Housing Operating Fund Assistance Listing Number: 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Public Housing Authorities (PHAs) that expend federal funds under the Public Housing Program are required to comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, including the procurement standards in 2 CFR Part 200, Subpart D, and the governmentwide nonprocurement suspension and debarment requirements in 2 CFR Part 180, as adopted and supplemented by HUD at 2 CFR Part 2424. Procurement Requirements The PHA must do the following: Maintain and follow documented procurement procedures for all procurement transactions that expend federal funds. The Public Housing Program are required to comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, including the procurement standards in 2 CFR Part 200, Subpart D, and the governmentwide nonprocurement suspension and debarment requirements in 2 CFR Part 180, as adopted and supplemented by HUD at 2 CFR Part 2424. Procurement Requirements The PHA must do the following: • Maintain and follow documented procurement procedures for all procurement transactions under federal awards, consistent with applicable State and local laws and the Uniform Guidance procurement standards (2 CFR § 200.318(a)). • Conduct procurements in a manner that provides for full and open competition, using only allowable procurement methods and avoiding practices that unnecessarily restrict competition (2 CFR §§ 200.318(d) and 200.319). 2024 – 012 - Procurement and Suspension and Debarment Procurement Requirements • Maintain written standards of conduct governing conflicts of interest (2 CFR § 200.318(c)). • Maintain oversight of contractors to ensure contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders (2 CFR § 200.318(b)). • Maintain records sufficient to detail the history of procurement, including rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price (2 CFR § 200.318(i)). • For procurements exceeding the Simplified Acquisition Threshold, perform a cost or price analysis in connection with every procurement action (2 CFR § 200.324). Suspension and Debarment Requirements HUD has adopted the governmentwide nonprocurement suspension and debarment requirements in 2 CFR Part 180, as supplemented by 2 CFR Part 2424, which apply to PHAs as participants in HUD covered transactions. Accordingly, the PHA must: • Ensure that federal funds are not used to enter into covered transactions with parties that are suspended, debarred, or otherwise excluded from participation in federal programs (2 CFR Parts 180 and 2424). • Establish and follow procedures to verify vendor eligibility, including consideration of the System for Award Management (SAM) exclusions framework, prior to entering into procurement transactions subject to the suspension and debarment requirements (2 CFR §§ 180.300, 180.320 and 2 CFR § 2424.300). Condition: During the testing of the Public Housing Program procurement and suspension and debarment activity, the following compliance and internal control deficiencies were noted: Procurement Of the 8 procurement transactions selected for testing: • 3 instances where the Authority was unable to provide or locate any documentation related to the contract, the payee, or the associated procurement process. • 1 instance where the client used MRO Cooperative Purchasing to select the vendor; however, the client did not download or retain the RFP, Addendum, Contracts, or SAM documentation, and the information is no longer available. Suspension and Debarment Of the 5 covered transactions (procurements ≥ $25,000) selected for testing: • 3 instances where the Authority did not have the supporting suspension and debarment (SAM) verification documentation evidencing that vendor eligibility was verified prior to entering into the covered transaction. • 1 instance where the verification date was not documented in the file Questioned costs: N/A 2024 – 012 - Procurement and Suspension and Debarment Context: Procurement Out of 8 procurement transactions tested, 5 contained errors as noted above. Suspension and Debarment Out of 5 suspension and debarment transactions tested, 3 contained errors as noted above. Cause: The Authority failed to retain and maintain adequate procurement documentation and did not have adequate internal controls in place to ensure that suspension and debarment verification procedures were consistently performed and documented prior to entering into covered transactions, in accordance with HUD rules and regulations and the Authority's procurement policy. Effect: The Authority is not in compliance with federal regulations regarding procurement and suspension and debarment requirements under the Uniform Guidance. The lack of documentation prevents verification that procurements were conducted competitively, that costs were reasonable, and that federal funds were not used to enter into covered transactions with suspended or debarred parties. Repeat Finding: No Recommendation: We recommend that the Authority designate an individual to maintain and retain all procurement documentation (including RFPs, addenda, contracts, cost analyses, and SAM exclusion searches) in a centralized file for each vendor, and to review each covered transaction prior to contract execution to confirm that suspension and debarment verification has been performed and documented in accordance with 2 CFR Part 200, Subpart D and 2 CFR Part 180. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 013 - Depository Agreement Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster and Public Housing Operating Fund Assistance Listing Number: 14.871;14.879 and 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Public Housing Agencies (PHAs) are required to deposit and hold all program funds in accordance with HUD requirements. Under 24 CFR section 982.156 (Housing Choice Voucher Program) and 24 CFR section 990.200 and the Annual Contributions Contract (ACC) for the Low Rent Public Housing Program, the PHA must enter into a General Depository Agreement (HUD-51999) with each financial institution holding HCV and Public Housing program funds. The depository agreement must be executed in the form prescribed by HUD and must require the financial institution to pledge collateral for any program funds on deposit in excess of the amount insured by the Federal Deposit Insurance Corporation (FDIC), in accordance with 24 CFR sections 982.156(b) and the ACC. 2024 – 013 - Depository Agreement Criteria or specific requirement: In addition, 2 CFR sections 200.302 and 200.303 require the PHA to maintain effective financial management systems and internal controls to safeguard federal funds and ensure that cash is properly managed in accordance with federal requirements. The PHA must maintain complete and accurate accounts and records for all program transactions in accordance with 24 CFR section 982.158(a). Condition: During the testing of special tests for the Housing Choice Voucher Program and the Low Rent Public Housing Program, we requested executed General Depository Agreements (HUD-51999) for each financial institution holding federal program funds. The Authority was unable to provide an executed General Depository Agreement for the HCVP or Public Housing program funds on deposit. As a result, federal program funds are being held at financial institutions without the HUD-required depository agreement and without evidence that collateral has been pledged for amounts on deposit in excess of FDIC insurance limits. Questioned costs: N/A Context: The Authority did not have an executed General Depository Agreement (HUD-51999) on file for any of the financial institutions holding HCVP or Public Housing program funds during the audit period. Cause: The Authority does not have adequate internal controls designed to ensure that a HUD-required General Depository Agreement is executed and maintained for each financial institution holding federal program funds, and that collateral is pledged for amounts in excess of FDIC insurance limits. Effect: The Authority is not in compliance with federal regulations regarding special tests and the safeguarding of federal program funds. Without an executed General Depository Agreement, federal funds on deposit in excess of FDIC insurance limits are not protected by pledged collateral, exposing the HCVP and Public Housing programs to potential loss. Repeat Finding: N/A Recommendation: We recommend that the Authority designate an individual to obtain and execute a General Depository Agreement (HUD-51999) with each financial institution holding HCVP and Public Housing program funds, ensure that collateral is pledged for amounts on deposit in excess of FDIC insurance limits, and maintain the executed agreements in a centralized file for ongoing monitoring. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 014 - Use of Excess Cash Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Public Housing Operating Fund Assistance Listing Number: 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Under 24 CFR § 990.280(b)(5), an asset management fee may be charged to a project only when the project has excess cash flow available after meeting all reasonable operating needs of the property. Additionally, 24 CFR § 990.280(c) provides that central office cost centers may be funded through asset management fees only to the extent those fees are available Condition: During the fiscal year ended June 30, 2024, the Authority charged an asset management fee to AMP 20. Based on the Authority’s year-end excess cash calculation, the AMP had negative excess cash after considering the reasonable operating needs of the property. Therefore, the AMP did not have excess cash available to support payment of the asset management fee. Questioned costs: N/A Context: The Authority was not in compliance with federal requirements related to excess cash and the maintenance of adequate supporting documentation. Cause: The Authority did not have an adequate review process to compare each AMP’s asset management fee against its year-end excess cash calculation before charging or paying the fee to the Central Office Cost Center. Effect: The Authority is not in compliance with federal regulations regarding use of excess cash. Repeat Finding: N/A Recommendation: We recommend that the Authority should also implement a year-end review process requiring management to document that each AMP has sufficient excess cash after meeting all reasonable operating needs before an asset management fee is charged or paid. Any unpaid or accrued asset management fees should also be reviewed and adjusted when the applicable AMP does not have sufficient excess cash. Views of responsible officials: There is no disagreement with the audit finding.