Audit 9256

Finding 2023-002 Voucher Requests and Obligation of Funds Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Program Title: Public Housing Capital Fund Program Assistance Listing Number: 14.872 Federal Award Identification Number and Year: WI39P011501-18 Award Period: April 1, 2022 – March 31, 2023 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance Compliance Requirements: Special Tests and Provisions – Capital Funds for Operating Costs Criteria or specific requirement: Per 24 CFR 905.108 “Obligation” Capital Funds identified in the Public Housing Authority’s (PHA) Capital Fund Program (CFP) 5-Year Action Plan to be transferred to operations are obligated by the PHA once the funds have been budgeted and drawn down by the PHA. The voucher request date must occur before those funds are reported as obligated in LOCCS under the Obligation & Expenditure tab (24 CFR section 905.314(1)). The CDA should have internal controls designed to ensure compliance with those provisions. Condition: During our testing, we noted the CDA did not have adequate internal controls designed to ensure all of the steps for obligation, including draw downs and voucher requests, were performed timely. Questioned costs: None Context: During our testing of the four draw downs, it was noted that two vouchers were not requested timely. One voucher draw was after the obligation end date however no extension of the obligation end date was requested. The second voucher draw occurred after the funds were reported as obligated in LOCCS. These draws violated 24 CFR 905 Public Housing Capital Fund Program regulations. Cause: No internal control in place to ensure timely submission of obligation and draw down of funds. Effect: The CDA will be subject to a 1/12 penalty on a future Capital Fund grant since it was noncompliant for one month with the statutory requirement for one of the draws made. Repeat Finding: No Recommendation: We recommend the CDA design controls to ensure timely submission of obligation and draw down of funds. Views of responsible officials: We agree with the finding of 2023-002 – Voucher Requests and Obligation of Funds.

Finding 2023-003 Suspension and Debarment Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Program Title: Public Housing Capital Fund Program Assistance Listing Number: 14.872 Federal Award Identification Number and Year: WI39P011501-20 Award Period: April 1, 2022 – March 31, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance Compliance Requirements: Suspension and Debarment Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement, suspension, and debarment. The CDA should have internal controls designed to ensure compliance with those provisions and that documentation be kept on file. This verification may be accomplished by: (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (Note: The OMB guidance at 2 CFR part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: During our testing, we noted the CDA did not have documentation on file that the verification for suspension and debarment was performed timely. Questioned costs: None Context: During our testing of the 1 contract over $25,000, it was noted that the verification documentation from SAM.gov was not kept on file at the time it was performed. It has been subsequently filed. Cause: No internal control in place to ensure documentation retained. Effect: The auditor noted no instances of noncompliance with the provisions of procurement, suspension, and debarment; however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance. Repeat Finding: No Recommendation: We recommend the CDA retain documentation of verification in its records and design a control for review and oversight of this requirement. Views of responsible officials: We agree with the finding of 2023-003 – Suspension and Debarment.

Finding 2023-002 Voucher Requests and Obligation of Funds Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Program Title: Public Housing Capital Fund Program Assistance Listing Number: 14.872 Federal Award Identification Number and Year: WI39P011501-18 Award Period: April 1, 2022 – March 31, 2023 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance Compliance Requirements: Special Tests and Provisions – Capital Funds for Operating Costs Criteria or specific requirement: Per 24 CFR 905.108 “Obligation” Capital Funds identified in the Public Housing Authority’s (PHA) Capital Fund Program (CFP) 5-Year Action Plan to be transferred to operations are obligated by the PHA once the funds have been budgeted and drawn down by the PHA. The voucher request date must occur before those funds are reported as obligated in LOCCS under the Obligation & Expenditure tab (24 CFR section 905.314(1)). The CDA should have internal controls designed to ensure compliance with those provisions. Condition: During our testing, we noted the CDA did not have adequate internal controls designed to ensure all of the steps for obligation, including draw downs and voucher requests, were performed timely. Questioned costs: None Context: During our testing of the four draw downs, it was noted that two vouchers were not requested timely. One voucher draw was after the obligation end date however no extension of the obligation end date was requested. The second voucher draw occurred after the funds were reported as obligated in LOCCS. These draws violated 24 CFR 905 Public Housing Capital Fund Program regulations. Cause: No internal control in place to ensure timely submission of obligation and draw down of funds. Effect: The CDA will be subject to a 1/12 penalty on a future Capital Fund grant since it was noncompliant for one month with the statutory requirement for one of the draws made. Repeat Finding: No Recommendation: We recommend the CDA design controls to ensure timely submission of obligation and draw down of funds. Views of responsible officials: We agree with the finding of 2023-002 – Voucher Requests and Obligation of Funds.

Finding 2023-003 Suspension and Debarment Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Program Title: Public Housing Capital Fund Program Assistance Listing Number: 14.872 Federal Award Identification Number and Year: WI39P011501-20 Award Period: April 1, 2022 – March 31, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance Compliance Requirements: Suspension and Debarment Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement, suspension, and debarment. The CDA should have internal controls designed to ensure compliance with those provisions and that documentation be kept on file. This verification may be accomplished by: (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (Note: The OMB guidance at 2 CFR part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: During our testing, we noted the CDA did not have documentation on file that the verification for suspension and debarment was performed timely. Questioned costs: None Context: During our testing of the 1 contract over $25,000, it was noted that the verification documentation from SAM.gov was not kept on file at the time it was performed. It has been subsequently filed. Cause: No internal control in place to ensure documentation retained. Effect: The auditor noted no instances of noncompliance with the provisions of procurement, suspension, and debarment; however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance. Repeat Finding: No Recommendation: We recommend the CDA retain documentation of verification in its records and design a control for review and oversight of this requirement. Views of responsible officials: We agree with the finding of 2023-003 – Suspension and Debarment.