Audit 85043

Funding Agency: U.S. Department of Agriculture Federal Award Agreement Number: Not Applicable Award Year: 2022 Title: Rural Rental Housing Loans Assistance Listing Number: 10.415 Pass-through Agency: Not Applicable, Direct Program Pass-through Identification Number: Not Applicable, Direct Program Condition: 8 out of 16 samples for tenant eligibility testing failed internal control. The tenant files were not initialed on tab 6 cover; 4 out of 16 samples for correct rent income failed internal control. The backup documentation ?Clarification Record? did not match the Rent Computation Worksheet, this is due to the form being filled out incorrectly by the Occupancy Specialist; and 1 out of 16 samples for correct rent income failed internal control. The file did not have backup documentation, the Rent Clarification Record sheet. Criteria: Per 2 CFR section 200.303 ? Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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).Per 7 CFR section 3560.203 ? Tenant Contributions: (a) A tenant?s contribution to rent charged for a rental unit in an Agency financed housing project is based on the tenant?s income, as calculated on the Agency?s tenant certification forms, and the availability of Agency or non-Agency rental subsidies. Per 7 CFR section 3560.254 ? Eligibility for rental assistance: (c) Eligible households eligible for rental assistance are those (1) with very low- or low-incomes who are eligible to live in MFH; (2) Whose net tenant contribution to rent determined in accordance with ? 3560.203(a)(1) is less than the basic rent for the unit. Effect: The Authority risks tenant files to be incorrect if no staff reviewed the backup documentation; the Authority risks inaccurate calculation for rent; and the Authority risks incomplete backup documentation and incorrect calculation for rent. Cause: Tenant files are manually initialed by Authority staff. It appears that the staff is not consistent with initialing the files; the backup documentation is a manual process, it appears that the staff was filling out the forms incorrectly; and All backup documentation is kept in the file, it appears that the staff did not safe the backup documentation correctly and were unable to locate the files.

Funding Agency: U.S. Department of Agriculture Federal Award Agreement Number: Not Applicable Award Year: 2022 Title: Rural Rental Housing Loans Assistance Listing Number: 10.415 Pass-through Agency: Not Applicable, Direct Program Pass-through Identification Number: Not Applicable, Direct Program Condition: 8 out of 16 samples for tenant eligibility testing failed internal control. The tenant files were not initialed on tab 6 cover; 4 out of 16 samples for correct rent income failed internal control. The backup documentation ?Clarification Record? did not match the Rent Computation Worksheet, this is due to the form being filled out incorrectly by the Occupancy Specialist; and 1 out of 16 samples for correct rent income failed internal control. The file did not have backup documentation, the Rent Clarification Record sheet. Criteria: Per 2 CFR section 200.303 ? Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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).Per 7 CFR section 3560.203 ? Tenant Contributions: (a) A tenant?s contribution to rent charged for a rental unit in an Agency financed housing project is based on the tenant?s income, as calculated on the Agency?s tenant certification forms, and the availability of Agency or non-Agency rental subsidies. Per 7 CFR section 3560.254 ? Eligibility for rental assistance: (c) Eligible households eligible for rental assistance are those (1) with very low- or low-incomes who are eligible to live in MFH; (2) Whose net tenant contribution to rent determined in accordance with ? 3560.203(a)(1) is less than the basic rent for the unit. Effect: The Authority risks tenant files to be incorrect if no staff reviewed the backup documentation; the Authority risks inaccurate calculation for rent; and the Authority risks incomplete backup documentation and incorrect calculation for rent. Cause: Tenant files are manually initialed by Authority staff. It appears that the staff is not consistent with initialing the files; the backup documentation is a manual process, it appears that the staff was filling out the forms incorrectly; and All backup documentation is kept in the file, it appears that the staff did not safe the backup documentation correctly and were unable to locate the files.