2025-004: HQS Quality Control Inspections 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: CA103VO, CA103AF, CA103 AFR; 2024 and 2025 Award Period: July 1, 2024 – June 30, 2025 Compliance Requirement Affected: N Special Tests and Provisions Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: The Public Housing Agency (PHA) must conduct supervisory quality control HQS inspections (24 CFR section 982.405(c)). Condition: The City was unable to provide us with a complete list of supervisory quality control HQS inspections performed for the fiscal year. Questioned Costs: None identified Context: The Section 8 Management Assessment Program (SEMAP) is the U.S. Department of Housing and Urban Development’s assessment program to measure performance of entities administering Section 8 Choice Housing Vouchers programs. One of the requirements is for the entity to perform supervisory quality control HQS inspections on a sample basis based on the number of vouchers being administered. For the current year, a minimum of 15 supervisory quality control HQS inspections were supposed to have been performed. Cause: Staff turnover in the City’s Housing Department Effect: The City was not in compliance with requirements of Housing Quality Standards for inspections. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City update their controls to ensure that the supervisory quality control HQS inspections are performed in a timely manner and that proper documentation of the annual process and results are maintained. Furthermore, we recommend reperformance of the supervisory quality control HQS inspections for FY24-25. Views of Responsible Officials and Corrective Action: Management agrees with this finding. The RBHA updated the administrative plan in 2026. The RBHA has calendared the required monthly days for current and future staff to schedule and conduct quality control inspections. Calendar reminders will alert staff to begin and complete the quality control inspections process. RBHA staff also created a file folder for Quality Control Inspections in the share drive to centralize the quality control inspections details for current and future staff. Within these folders are tracking forms to document that the supervisory inspections that are performed in a timely manner and that proper documentation of the annual process and results are maintained.
2025-005: 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: CA103VO, CA103AF, CA103 AFR; 2024 and 2025 Award Period: July 1, 2024 – June 30, 2025 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 a certain employee 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 $26,350 for the year. Context: 3 of the 19 payroll transactions tested were not supported by time and effort documentation. Total payroll costs charged to this grant program for the year were $504,435. 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. Effect: Unsupported payroll charges for time and effort pertaining to grant programs may be disallowed by the grantor. Repeat Finding: Yes; 2024-008 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. This finding recurrence is due to the timing of the prior year’s audit. While staff applied corrective measures upon the initial finding, this was not in sufficient time to correct the identified practices in FY 2024-25. Management continues to reinforce the policy that requires employees funded by federal grants to document the actual time and effort spent working on those grant activities. Staff continues with the updated timekeeping method for individuals charging partial time to the Housing Choice Voucher (Section 8) program to track actual hours dedicated to the program rather than through budget allocation, and a quarterly certification form is prepared for employees that charge 100% to the Housing Choice Voucher (Section 8) program. Supervisor approvals are documented through the financial system’s electronic workflow. Reports are generated to demonstrate completion. New staff receive training on the payroll approval process to ensure consistent implementation and compliance with procedures.
2025-006: 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: CA103VO, CA103AF, CA103 AFR; 2024 and 2025 Award Period: July 1, 2024 – June 30, 2025 Compliance Requirement Affected: L. Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter 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), 12 days after the due date imposed by the federal government. Questioned Costs: None identified Context: Nothing additional to provide Cause: Due to staff turnover in the Housing Department, City staff were unable to meet the deadline to submit unaudited financial information. Effect: The City was late in their submission of the FDS. Repeat Finding: Yes; 2024-007 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 recurrence of this finding, which also was identified in prior-year (2023-2024), is primarily due to disruptions in continuousness and the consistent implementation of established timelines and processes. Corrective action addressed in prior-year (2023-2024) remains in effect. The RBHA contracted a financial consultant to assist with the preparation and timely submission of monthly and annual financial reports in 2025. The RBHA also reinforced internal procedures to ensure staff prepare and provide the necessary financial data to the consultant in advance of the FDS submission deadlines as soon as the Single Audit is complete. Staff will continue to utilize calendar reminders to monitor deadlines and coordinate with the consultant and other parties involved in the reporting process to ensure timely reporting and timely completion of the audit. Management will communicate these responsibilities to new staff as necessary to ensure ongoing compliance and prevent recurrence.
2025-007: 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: CA103VO, CA103AF, CA103 AFR; 2024 and 2025 Award Period: July 1, 2024 – June 30, 2025 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: Yes; 2024-009 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. This finding, which also was identified in prior-year (2023-2024), is disruption in adequate documentation and monitoring of the corrective procedures. Supporting documentation evidencing the review and approval of certain internal control processes, including the timing of those reviews, was not found. Management recognizes the importance of maintaining adequate documentation to demonstrate the required reviews and approvals are performed timely and consistently at all times. The RBHA established procedures to monitor and ensure proper file review in the prior-year (2023-2024) corrective action by creating a new checklist for a supervising team member to review intake files for accuracy, to document approval, release the Housing Assistance Payments, and maintain a record of the signed checklist in the participant file. To prevent recurrence, new staff will be informed of this requirement.
2025-008: 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: CA103VO, CA103AF, CA103 AFR; 2024 and 2025 Award Period: July 1, 2024 – June 30, 2025 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 City was unable to provide any evidence of who reviewed and approved the monthly reports prior to submission. Additionally, we were unable to trace certain significant information contained in the 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. 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: The RBHA established a process by which Housing staff generate the reports required to prepare the VMS and provide the Finance Department staff a copy in order to document timing and ensure additional review. Also, the RBHA and Finance revised the City’s account structure for Housing-related expenses to align with the City’s account setup with VMS reporting. The RBHA will provide monthly reports to the Finance Department and the financial consultant to document the timing of the reports and facilitate an independent review and ensure the monthly submissions are properly reviewed, approved, and retained for audit purposes.