Federal Program Information U.S. Department of Housing and Urban Development Housing Trust Fund (ALN: 14.275) Criteria or specific requirement The Uniform Guidance 2 CFR section 200.303 states, “The non-Federal entity must: (a) Establish and maintain effective internal control over the 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).” The Uniform Guidance 2 CFR section 200.510 states, “(b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended.” Condition The Agency omitted federally-funded expenditures required to be reported as part of the Schedule for the year ended October 31, 2019. Cause The Agency’s internal controls in place over the preparation of the Schedule were not sufficient to accurately report all expenditures of federal awards. Effect The omission of expenditures resulted in a major program not being identified in a timely manner. Section III –Federal Awards Findings and Questioned Costs (continued) Questioned Costs None. Context Expenditures of ALN 14.275 Housing Trust Fund were understated by $5.3 million. Identification as a Repeat Finding, if applicable This is not a repeat finding. Recommendation The Agency should review its internal controls over the process of accumulating and reporting expenditures of federal awards. Views of Responsible Officials The Agency agrees with the finding and has developed internal controls to ensure accurate and complete reporting of federal expenditures.
Finding Number: 2019-007 Prior Year Finding Number: N/A Compliance Requirement: Equipment and Real Property Management Information on Federal Program(s) - U.S. Department of Transportation: Direct Program: Federal Aviation Administration Airport Improvement Program CFDA Number: 20.106 Criteria or Specific Requirement – Per 2 CFR section 200.313, Equipment, property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, cost of the property, percentage of Federal participation in the cost of the property, the location, use and conditions of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Further, a physical inventory of equipment should be taken at least once every 2 years and reconciled to the equipment records along with the usage of an appropriate control system to safeguard and maintain equipment. Additionally, the Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Condition – The Authority did not conduct a physical inventory count of equipment in the last two years. The most recent physical inventory count was performed during fiscal year 2017. Further, it does not appear that internal controls over compliance are operating at a level of precision to ensure compliance with the physical inventory count requirement. Questioned Costs – Not determinable. Context – This is a condition identified per review of the Authority’s compliance with the specified requirements. Effect – There is a risk that inadequate monitoring of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received. Cause – The internal controls established for the physical inventory count did not fully operate as designed causing the Authority to fall out of compliance with the required timing of such physical inventory count. Recommendation – We recommend that the Authority improve internal controls to ensure adherence to Federal regulations related to performing physical inventory counts of equipment. There should be timely coordination and communication amongst all departments that are responsible for handling and managing such assets. Views of Responsible Officials - The Authority concurs with the auditor’s findings and recommendations. The planned corrective actions are presented in the Authority’s Corrective Action Plan which is attached as Appendix B.
Finding Number: 2019-007 Prior Year Finding Number: N/A Compliance Requirement: Equipment and Real Property Management Information on Federal Program(s) - U.S. Department of Transportation: Direct Program: Federal Aviation Administration Airport Improvement Program CFDA Number: 20.106 Criteria or Specific Requirement – Per 2 CFR section 200.313, Equipment, property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, cost of the property, percentage of Federal participation in the cost of the property, the location, use and conditions of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Further, a physical inventory of equipment should be taken at least once every 2 years and reconciled to the equipment records along with the usage of an appropriate control system to safeguard and maintain equipment. Additionally, the Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Condition – The Authority did not conduct a physical inventory count of equipment in the last two years. The most recent physical inventory count was performed during fiscal year 2017. Further, it does not appear that internal controls over compliance are operating at a level of precision to ensure compliance with the physical inventory count requirement. Questioned Costs – Not determinable. Context – This is a condition identified per review of the Authority’s compliance with the specified requirements. Effect – There is a risk that inadequate monitoring of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received. Cause – The internal controls established for the physical inventory count did not fully operate as designed causing the Authority to fall out of compliance with the required timing of such physical inventory count. Recommendation – We recommend that the Authority improve internal controls to ensure adherence to Federal regulations related to performing physical inventory counts of equipment. There should be timely coordination and communication amongst all departments that are responsible for handling and managing such assets. Views of Responsible Officials - The Authority concurs with the auditor’s findings and recommendations. The planned corrective actions are presented in the Authority’s Corrective Action Plan which is attached as Appendix B.
Finding SA2019-008: Internal Controls AL number: 14.850 and 14.871 AL Title: Public and Indian Housing, and Housing Voucher Cluster - Section 8 Housing Choice Vouchers Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification number and year: CA010 (2019) Criteria: Public Housing Authorities (PHA) are required to establish and maintain effective internal control over the 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 as stated in CFR 200.303. Condition: During our audit, we were unable to obtain an understanding of the internal controls over the federal awards of the Authority, because current Authority staff could not respond to our inquiries about processes and procedures. Cause: We understand that the staff overseeing the federal awards during fiscal year 2019 are no longer with the Authority, and therefore, the staff overseeing the federal awards subsequent to the fiscal year were unable to provide any information regarding the internal controls of the Authority. Effect: The Housing Authority is not in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award as stated in CFR 200.303. Recommendation: The Housing Authority must develop procedures to ensure that there is an internal control environment in compliance with the federal requirements. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the Housing Authority.
Finding SA2019-008: Internal Controls AL number: 14.850 and 14.871 AL Title: Public and Indian Housing, and Housing Voucher Cluster - Section 8 Housing Choice Vouchers Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification number and year: CA010 (2019) Criteria: Public Housing Authorities (PHA) are required to establish and maintain effective internal control over the 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 as stated in CFR 200.303. Condition: During our audit, we were unable to obtain an understanding of the internal controls over the federal awards of the Authority, because current Authority staff could not respond to our inquiries about processes and procedures. Cause: We understand that the staff overseeing the federal awards during fiscal year 2019 are no longer with the Authority, and therefore, the staff overseeing the federal awards subsequent to the fiscal year were unable to provide any information regarding the internal controls of the Authority. Effect: The Housing Authority is not in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award as stated in CFR 200.303. Recommendation: The Housing Authority must develop procedures to ensure that there is an internal control environment in compliance with the federal requirements. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the Housing Authority.
Finding SA2019-008: Internal Controls AL number: 14.850 and 14.871 AL Title: Public and Indian Housing, and Housing Voucher Cluster - Section 8 Housing Choice Vouchers Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification number and year: CA010 (2019) Criteria: Public Housing Authorities (PHA) are required to establish and maintain effective internal control over the 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 as stated in CFR 200.303. Condition: During our audit, we were unable to obtain an understanding of the internal controls over the federal awards of the Authority, because current Authority staff could not respond to our inquiries about processes and procedures. Cause: We understand that the staff overseeing the federal awards during fiscal year 2019 are no longer with the Authority, and therefore, the staff overseeing the federal awards subsequent to the fiscal year were unable to provide any information regarding the internal controls of the Authority. Effect: The Housing Authority is not in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award as stated in CFR 200.303. Recommendation: The Housing Authority must develop procedures to ensure that there is an internal control environment in compliance with the federal requirements. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the Housing Authority.
Finding SA2019-008: Internal Controls AL number: 14.850 and 14.871 AL Title: Public and Indian Housing, and Housing Voucher Cluster - Section 8 Housing Choice Vouchers Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification number and year: CA010 (2019) Criteria: Public Housing Authorities (PHA) are required to establish and maintain effective internal control over the 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 as stated in CFR 200.303. Condition: During our audit, we were unable to obtain an understanding of the internal controls over the federal awards of the Authority, because current Authority staff could not respond to our inquiries about processes and procedures. Cause: We understand that the staff overseeing the federal awards during fiscal year 2019 are no longer with the Authority, and therefore, the staff overseeing the federal awards subsequent to the fiscal year were unable to provide any information regarding the internal controls of the Authority. Effect: The Housing Authority is not in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award as stated in CFR 200.303. Recommendation: The Housing Authority must develop procedures to ensure that there is an internal control environment in compliance with the federal requirements. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the Housing Authority.
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI, Compliance Supplement 2017, Part 6 Internal Control section 6-M-1 states: "The A-102 Common Rule, 0MB Circular A-110 and 2 CFR section 200.303 require that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." Condition: The City did not properly approve payroll timesheets for both CDBG and Section 8 program administration expenditures. Cause: Lack of internal controls and adequate staff training over the proper approval process of electronic timesheets. Effect or Potential Effect: The City could be charging an inaccurate or unallowable amount of payroll expenditures to its Federal grants programs, which is a noncompliance for allowable costs. Questioned Cost: Unknown Context: We selected a sample of two employees for four pay periods each for CDBG and Section 8 to test payroll internal controls and compliance. Our review identified 8 out of the 13 timesheets had no indication of supervisory review and approval, and no further support can be provided to ascertain that the timesheet is accurate and valid for direct program administration to request for Federal award reimbursement. Repeat of a Prior-Year Finding: No
Criteria: The Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI, Compliance Supplement 2017, Part 6 Internal Control section 6-M-1 states: "The A-102 Common Rule, 0MB Circular A-110 and 2 CFR section 200.303 require that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." Condition: The City did not properly approve payroll timesheets for both CDBG and Section 8 program administration expenditures. Cause: Lack of internal controls and adequate staff training over the proper approval process of electronic timesheets. Effect or Potential Effect: The City could be charging an inaccurate or unallowable amount of payroll expenditures to its Federal grants programs, which is a noncompliance for allowable costs. Questioned Cost: Unknown Context: We selected a sample of two employees for four pay periods each for CDBG and Section 8 to test payroll internal controls and compliance. Our review identified 8 out of the 13 timesheets had no indication of supervisory review and approval, and no further support can be provided to ascertain that the timesheet is accurate and valid for direct program administration to request for Federal award reimbursement. Repeat of a Prior-Year Finding: No