2024-002 [2022‐002]—PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFederal Agency: All presented in the Schedule of Expenditures of Federal Awards. Program Name: All presented in the Schedule of Expenditures of Federal Awards. Assistance Listing Nos. and Program Expenditures: All presented in Schedule of Expenditures of Federal Awards. Award Number and Program Award Year: All awards presented in Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Schedule of Expenditures of Federal Awards preparation Type of Finding: (F) Significant Deficiency in Internal Control over Compliance of Federal Awards. Questioned Costs: None Statement of Condition During our audit, we reviewed the Coalition’s federal-grants report for the fiscal year and identified the grants, Assistance-Listing numbers (AL #s), expenditure amounts, and all other items required to properly present the Schedule of Expenditures of Federal Awards (SEFA). Finance staff subsequently confirmed the SEFA; however, additional federal expenditures and mis-grouped grant costs were found during later reviews. Criteria2 CFR 200.510 indicates that the auditee must 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 2 CFR 200.502, Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Effect Without an established process governed by effective internal controls, the Coalition may not prevent or detect material misstatements on its SEFA in a timely manner. In addition, errors in SEFA preparation could affect the major federal program determination and lead to noncompliance with 2 CFR 200 Subpart F, which in turn could result in a substandard single audit. Cause Historically, the Coalition has requested the auditor assist in identifying accruals related to federal grant expenditures as the organization has maintained these records on a cash basis. As the organization has taken more responsibility on maintaining its federal grant expenditures on an accrual basis, an incomplete SEFA has been provided. Recommendation We recommend the Coalition prepare the Schedule of Expenditures of Federal Awards and submit this to the auditor for testing. The SEFA should include the name of the grant, name of grantor, the AL #, the pass-through number if applicable and a reconciliation of the federal revenues and expenditures to the Coalition’s general ledger. The Coalition staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Officials and Corrective Action Plan: The corrective Action Plan will be carried out in the 2025 Fiscal Year and information will be given to the auditors when requested for the next audit. The Coalition will ensure that all information needed for the SEFA is kept and entered accurately (this process has already begun). When the fiscal year closes out, the Coalition will provide the auditors with a test SEFA to confirm that the information we are collecting throughout the year and are asserting are the correct numbers for our federal grants, is indeed the correct information. Corrective Action Plan Timeline: Completed by December 19, 2025 (Final copy of the SEFA will not be given to the auditors until requested for the Audit).Designation Of Employee Position Responsible For Meeting Deadline: Executive Director will oversee this project and work directly with NMCEH finance staff work closely with the auditors to make sure that the information saved and shared is correct.
Item 2024-002 Reporting (Repeat 2023-002) Head Start and Early Head Start Assistance Listing #93.600 Head Start Grant No. 04CH01121 U.S. Department of Health and Human Services Federal Award Year - 2024 Condition – Adequate controls were not in place to review and approve grant reports prior to their submission to the grantor. The Federal Financial Reports (SF-425) for the Head Start Cluster grants were not reviewed and approved prior to submission to the Payment Management System. Criteria – Grantees should have controls in place to ensure that grant reports are being reviewed and approved by management prior to being submitted to the grantor. 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause – Lack of sufficient controls over the review and approval of grant reports to ensure the accuracy and completeness of the report being submitted to the grantor. Questioned Costs – Not applicable. Effect – Lack of proper review and approval could result in improper reporting which could lead to disallowed costs. However, our audit disclosed no instances of unallowable costs. Recommendation – We recommend the implementation of controls to ensure there is evidence of review and approval of the quarterly grant reports prior to submission to the grantor. Management’s Response – The Agency will implement controls to ensure proper review and approval is obtained on required grant reports prior to submission to the grantor.
Finding Number: 2024-001 Finding Title : Internal Controls and Compliance over Eligibility for Multifamily Housing Projects Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 24 CFR92.252 Qualification as affordable housing: Rental housing - (e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period, beginning after project completion. (1) The affordability requirements: (i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership. (ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure); and (iii) Must be recorded in accordance with State recordation laws. (2) The participating jurisdiction may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (4) The termination of the restrictions on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b). (h) Tenant income. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. An owner of a multifamily project with an affordability period of ten years or more who re-examines tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must examine the income of each tenant, in accordance with § 92.203(b)(1)(i), every sixth year of the affordability period, except that, for units that receive Federal or State project-based rental subsidy, the owner must accept the income determination pursuant to § 92.203(a)(1). 24 CFR 92.203 Income determinations - (b) Required Documentation for Annual Income Calculations (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with §92.252(h): (i) Examine at least two months of source documents evidencing annual income (e.g., wage statement, interest statement, and unemployment compensation statement) for the family. (ii) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (iii) Obtain a written statement from the administrator of a government program under which the family receives benefits, and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The City was unable to collect documents from the property manager to ensure that individuals who occupied HOME assisted units were eligible tenants for four of the eight properties selected for testing from a population of seventy-four properties. The four properties for which documents could not be collected included a total of forty-two units, all related to the same development group. The City was unable to obtain the necessary documentation from the development groups property manager to verify household income for each tenant. As a result, it could not determine compliance with income eligibility, maximum rent limits, or minimum set-aside requirements for units designated for eligible individuals. Cause The City’s attempts to contact the development group for these properties have been unsuccessful, the city was therefore unable to obtain the required documents to assess each family's income which is needed for determining income eligibility, compliance with maximum rent requirements or minimum set-aside requirements for units designated for eligible individuals. The City has made continued attempts to contact the development group, though they have not yet been successful in obtaining the information. Effect or potential effect The lack of information available from the development group has meant the City is without the information needed to evaluate the properties and their related tenants for compliance with HUD eligibility criteria. Questioned costs None Context The City had eighteen outstanding loans with this development group for Multi Family Construction projects as of the fiscal year end, carrying a balance of $9.5m. This represents 12% of the 154 HOME Loans and their related $79.3m outstanding balances. Identification as a repeat finding if applicable 2023-002 Recommendation We recommend the City continue its attempts to obtain the necessary documents from the developer and exercising its rights to enforce compliance through the terms of its contractual arrangement when necessary. Additionally, we recommend the City enhance policies and/or procedure for addressing unresponsiveness among developers to establish a structure for clear communication, expectations, an escalation process, and consistent documentation requirements. Views of responsible officials and planned corrective actions The City continues to monitor HOME-assisted units to ensure eligibility with income requirements. Since the last audit period, the developer has not yet complied with multiple requests from the City to provide missing documentation; however, City staff continues outreach and has communicated shortcomings with said developer on the dates mentioned in FY 23 corrective action plan and also July 2, 2024, July 16, 2024, July 18, 2024, September 3, 2024, September 10, 2024, September 11, 2024, September 18, 2024, October 30, 2024, November 4, 2024, and December 2, 2024. The City informed the developer that continued non-compliance will result in escalation to the City Attorney, and escalation is currently underway. The City has updated procedures to add layers of review and increase frequency of communication with developers to ensure timely submission and efforts to obtain necessary documents. The City is confident that these measures will demonstrate compliance with eligibility requirements and resolve the auditor’s concerns.
Finding Number: 2024-001 Finding Title : Internal Controls and Compliance over Eligibility for Multifamily Housing Projects Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 24 CFR92.252 Qualification as affordable housing: Rental housing - (e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period, beginning after project completion. (1) The affordability requirements: (i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership. (ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure); and (iii) Must be recorded in accordance with State recordation laws. (2) The participating jurisdiction may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (4) The termination of the restrictions on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b). (h) Tenant income. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. An owner of a multifamily project with an affordability period of ten years or more who re-examines tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must examine the income of each tenant, in accordance with § 92.203(b)(1)(i), every sixth year of the affordability period, except that, for units that receive Federal or State project-based rental subsidy, the owner must accept the income determination pursuant to § 92.203(a)(1). 24 CFR 92.203 Income determinations - (b) Required Documentation for Annual Income Calculations (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with §92.252(h): (i) Examine at least two months of source documents evidencing annual income (e.g., wage statement, interest statement, and unemployment compensation statement) for the family. (ii) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (iii) Obtain a written statement from the administrator of a government program under which the family receives benefits, and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The City was unable to collect documents from the property manager to ensure that individuals who occupied HOME assisted units were eligible tenants for four of the eight properties selected for testing from a population of seventy-four properties. The four properties for which documents could not be collected included a total of forty-two units, all related to the same development group. The City was unable to obtain the necessary documentation from the development groups property manager to verify household income for each tenant. As a result, it could not determine compliance with income eligibility, maximum rent limits, or minimum set-aside requirements for units designated for eligible individuals. Cause The City’s attempts to contact the development group for these properties have been unsuccessful, the city was therefore unable to obtain the required documents to assess each family's income which is needed for determining income eligibility, compliance with maximum rent requirements or minimum set-aside requirements for units designated for eligible individuals. The City has made continued attempts to contact the development group, though they have not yet been successful in obtaining the information. Effect or potential effect The lack of information available from the development group has meant the City is without the information needed to evaluate the properties and their related tenants for compliance with HUD eligibility criteria. Questioned costs None Context The City had eighteen outstanding loans with this development group for Multi Family Construction projects as of the fiscal year end, carrying a balance of $9.5m. This represents 12% of the 154 HOME Loans and their related $79.3m outstanding balances. Identification as a repeat finding if applicable 2023-002 Recommendation We recommend the City continue its attempts to obtain the necessary documents from the developer and exercising its rights to enforce compliance through the terms of its contractual arrangement when necessary. Additionally, we recommend the City enhance policies and/or procedure for addressing unresponsiveness among developers to establish a structure for clear communication, expectations, an escalation process, and consistent documentation requirements. Views of responsible officials and planned corrective actions The City continues to monitor HOME-assisted units to ensure eligibility with income requirements. Since the last audit period, the developer has not yet complied with multiple requests from the City to provide missing documentation; however, City staff continues outreach and has communicated shortcomings with said developer on the dates mentioned in FY 23 corrective action plan and also July 2, 2024, July 16, 2024, July 18, 2024, September 3, 2024, September 10, 2024, September 11, 2024, September 18, 2024, October 30, 2024, November 4, 2024, and December 2, 2024. The City informed the developer that continued non-compliance will result in escalation to the City Attorney, and escalation is currently underway. The City has updated procedures to add layers of review and increase frequency of communication with developers to ensure timely submission and efforts to obtain necessary documents. The City is confident that these measures will demonstrate compliance with eligibility requirements and resolve the auditor’s concerns.
Finding Number: 2024-001 Finding Title : Internal Controls and Compliance over Eligibility for Multifamily Housing Projects Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 24 CFR92.252 Qualification as affordable housing: Rental housing - (e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period, beginning after project completion. (1) The affordability requirements: (i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership. (ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure); and (iii) Must be recorded in accordance with State recordation laws. (2) The participating jurisdiction may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (4) The termination of the restrictions on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b). (h) Tenant income. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. An owner of a multifamily project with an affordability period of ten years or more who re-examines tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must examine the income of each tenant, in accordance with § 92.203(b)(1)(i), every sixth year of the affordability period, except that, for units that receive Federal or State project-based rental subsidy, the owner must accept the income determination pursuant to § 92.203(a)(1). 24 CFR 92.203 Income determinations - (b) Required Documentation for Annual Income Calculations (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with §92.252(h): (i) Examine at least two months of source documents evidencing annual income (e.g., wage statement, interest statement, and unemployment compensation statement) for the family. (ii) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (iii) Obtain a written statement from the administrator of a government program under which the family receives benefits, and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The City was unable to collect documents from the property manager to ensure that individuals who occupied HOME assisted units were eligible tenants for four of the eight properties selected for testing from a population of seventy-four properties. The four properties for which documents could not be collected included a total of forty-two units, all related to the same development group. The City was unable to obtain the necessary documentation from the development groups property manager to verify household income for each tenant. As a result, it could not determine compliance with income eligibility, maximum rent limits, or minimum set-aside requirements for units designated for eligible individuals. Cause The City’s attempts to contact the development group for these properties have been unsuccessful, the city was therefore unable to obtain the required documents to assess each family's income which is needed for determining income eligibility, compliance with maximum rent requirements or minimum set-aside requirements for units designated for eligible individuals. The City has made continued attempts to contact the development group, though they have not yet been successful in obtaining the information. Effect or potential effect The lack of information available from the development group has meant the City is without the information needed to evaluate the properties and their related tenants for compliance with HUD eligibility criteria. Questioned costs None Context The City had eighteen outstanding loans with this development group for Multi Family Construction projects as of the fiscal year end, carrying a balance of $9.5m. This represents 12% of the 154 HOME Loans and their related $79.3m outstanding balances. Identification as a repeat finding if applicable 2023-002 Recommendation We recommend the City continue its attempts to obtain the necessary documents from the developer and exercising its rights to enforce compliance through the terms of its contractual arrangement when necessary. Additionally, we recommend the City enhance policies and/or procedure for addressing unresponsiveness among developers to establish a structure for clear communication, expectations, an escalation process, and consistent documentation requirements. Views of responsible officials and planned corrective actions The City continues to monitor HOME-assisted units to ensure eligibility with income requirements. Since the last audit period, the developer has not yet complied with multiple requests from the City to provide missing documentation; however, City staff continues outreach and has communicated shortcomings with said developer on the dates mentioned in FY 23 corrective action plan and also July 2, 2024, July 16, 2024, July 18, 2024, September 3, 2024, September 10, 2024, September 11, 2024, September 18, 2024, October 30, 2024, November 4, 2024, and December 2, 2024. The City informed the developer that continued non-compliance will result in escalation to the City Attorney, and escalation is currently underway. The City has updated procedures to add layers of review and increase frequency of communication with developers to ensure timely submission and efforts to obtain necessary documents. The City is confident that these measures will demonstrate compliance with eligibility requirements and resolve the auditor’s concerns.
Finding Number: 2024-001 Finding Title : Internal Controls and Compliance over Eligibility for Multifamily Housing Projects Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 24 CFR92.252 Qualification as affordable housing: Rental housing - (e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period, beginning after project completion. (1) The affordability requirements: (i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership. (ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure); and (iii) Must be recorded in accordance with State recordation laws. (2) The participating jurisdiction may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (4) The termination of the restrictions on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b). (h) Tenant income. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. An owner of a multifamily project with an affordability period of ten years or more who re-examines tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must examine the income of each tenant, in accordance with § 92.203(b)(1)(i), every sixth year of the affordability period, except that, for units that receive Federal or State project-based rental subsidy, the owner must accept the income determination pursuant to § 92.203(a)(1). 24 CFR 92.203 Income determinations - (b) Required Documentation for Annual Income Calculations (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with §92.252(h): (i) Examine at least two months of source documents evidencing annual income (e.g., wage statement, interest statement, and unemployment compensation statement) for the family. (ii) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (iii) Obtain a written statement from the administrator of a government program under which the family receives benefits, and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The City was unable to collect documents from the property manager to ensure that individuals who occupied HOME assisted units were eligible tenants for four of the eight properties selected for testing from a population of seventy-four properties. The four properties for which documents could not be collected included a total of forty-two units, all related to the same development group. The City was unable to obtain the necessary documentation from the development groups property manager to verify household income for each tenant. As a result, it could not determine compliance with income eligibility, maximum rent limits, or minimum set-aside requirements for units designated for eligible individuals. Cause The City’s attempts to contact the development group for these properties have been unsuccessful, the city was therefore unable to obtain the required documents to assess each family's income which is needed for determining income eligibility, compliance with maximum rent requirements or minimum set-aside requirements for units designated for eligible individuals. The City has made continued attempts to contact the development group, though they have not yet been successful in obtaining the information. Effect or potential effect The lack of information available from the development group has meant the City is without the information needed to evaluate the properties and their related tenants for compliance with HUD eligibility criteria. Questioned costs None Context The City had eighteen outstanding loans with this development group for Multi Family Construction projects as of the fiscal year end, carrying a balance of $9.5m. This represents 12% of the 154 HOME Loans and their related $79.3m outstanding balances. Identification as a repeat finding if applicable 2023-002 Recommendation We recommend the City continue its attempts to obtain the necessary documents from the developer and exercising its rights to enforce compliance through the terms of its contractual arrangement when necessary. Additionally, we recommend the City enhance policies and/or procedure for addressing unresponsiveness among developers to establish a structure for clear communication, expectations, an escalation process, and consistent documentation requirements. Views of responsible officials and planned corrective actions The City continues to monitor HOME-assisted units to ensure eligibility with income requirements. Since the last audit period, the developer has not yet complied with multiple requests from the City to provide missing documentation; however, City staff continues outreach and has communicated shortcomings with said developer on the dates mentioned in FY 23 corrective action plan and also July 2, 2024, July 16, 2024, July 18, 2024, September 3, 2024, September 10, 2024, September 11, 2024, September 18, 2024, October 30, 2024, November 4, 2024, and December 2, 2024. The City informed the developer that continued non-compliance will result in escalation to the City Attorney, and escalation is currently underway. The City has updated procedures to add layers of review and increase frequency of communication with developers to ensure timely submission and efforts to obtain necessary documents. The City is confident that these measures will demonstrate compliance with eligibility requirements and resolve the auditor’s concerns.
Finding Number: 2024-001 Finding Title : Internal Controls and Compliance over Eligibility for Multifamily Housing Projects Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 24 CFR92.252 Qualification as affordable housing: Rental housing - (e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period, beginning after project completion. (1) The affordability requirements: (i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership. (ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure); and (iii) Must be recorded in accordance with State recordation laws. (2) The participating jurisdiction may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (4) The termination of the restrictions on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b). (h) Tenant income. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. An owner of a multifamily project with an affordability period of ten years or more who re-examines tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must examine the income of each tenant, in accordance with § 92.203(b)(1)(i), every sixth year of the affordability period, except that, for units that receive Federal or State project-based rental subsidy, the owner must accept the income determination pursuant to § 92.203(a)(1). 24 CFR 92.203 Income determinations - (b) Required Documentation for Annual Income Calculations (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with §92.252(h): (i) Examine at least two months of source documents evidencing annual income (e.g., wage statement, interest statement, and unemployment compensation statement) for the family. (ii) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (iii) Obtain a written statement from the administrator of a government program under which the family receives benefits, and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The City was unable to collect documents from the property manager to ensure that individuals who occupied HOME assisted units were eligible tenants for four of the eight properties selected for testing from a population of seventy-four properties. The four properties for which documents could not be collected included a total of forty-two units, all related to the same development group. The City was unable to obtain the necessary documentation from the development groups property manager to verify household income for each tenant. As a result, it could not determine compliance with income eligibility, maximum rent limits, or minimum set-aside requirements for units designated for eligible individuals. Cause The City’s attempts to contact the development group for these properties have been unsuccessful, the city was therefore unable to obtain the required documents to assess each family's income which is needed for determining income eligibility, compliance with maximum rent requirements or minimum set-aside requirements for units designated for eligible individuals. The City has made continued attempts to contact the development group, though they have not yet been successful in obtaining the information. Effect or potential effect The lack of information available from the development group has meant the City is without the information needed to evaluate the properties and their related tenants for compliance with HUD eligibility criteria. Questioned costs None Context The City had eighteen outstanding loans with this development group for Multi Family Construction projects as of the fiscal year end, carrying a balance of $9.5m. This represents 12% of the 154 HOME Loans and their related $79.3m outstanding balances. Identification as a repeat finding if applicable 2023-002 Recommendation We recommend the City continue its attempts to obtain the necessary documents from the developer and exercising its rights to enforce compliance through the terms of its contractual arrangement when necessary. Additionally, we recommend the City enhance policies and/or procedure for addressing unresponsiveness among developers to establish a structure for clear communication, expectations, an escalation process, and consistent documentation requirements. Views of responsible officials and planned corrective actions The City continues to monitor HOME-assisted units to ensure eligibility with income requirements. Since the last audit period, the developer has not yet complied with multiple requests from the City to provide missing documentation; however, City staff continues outreach and has communicated shortcomings with said developer on the dates mentioned in FY 23 corrective action plan and also July 2, 2024, July 16, 2024, July 18, 2024, September 3, 2024, September 10, 2024, September 11, 2024, September 18, 2024, October 30, 2024, November 4, 2024, and December 2, 2024. The City informed the developer that continued non-compliance will result in escalation to the City Attorney, and escalation is currently underway. The City has updated procedures to add layers of review and increase frequency of communication with developers to ensure timely submission and efforts to obtain necessary documents. The City is confident that these measures will demonstrate compliance with eligibility requirements and resolve the auditor’s concerns.
Finding Number: 2024-001 Finding Title : Internal Controls and Compliance over Eligibility for Multifamily Housing Projects Compliance Requirement(s): Eligibility Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) 24 CFR92.252 Qualification as affordable housing: Rental housing - (e) Periods of affordability. The HOME-assisted units must meet the affordability requirements for not less than the applicable period, beginning after project completion. (1) The affordability requirements: (i) Apply without regard to the term of any loan or mortgage, repayment of the HOME investment, or the transfer of ownership. (ii) Must be imposed by a deed restriction, a covenant running with the land, an agreement restricting the use of the property, or other mechanisms approved by HUD and must give the participating jurisdiction the right to require specific performance (except that the participating jurisdiction may provide that the affordability restrictions may terminate upon foreclosure or transfer in lieu of foreclosure); and (iii) Must be recorded in accordance with State recordation laws. (2) The participating jurisdiction may use purchase options, rights of first refusal or other preemptive rights to purchase the housing before foreclosure or deed in lieu of foreclosure to preserve affordability. (3) The affordability restrictions shall be revived according to the original terms if, during the original affordability period, the owner of record before the foreclosure, or deed in lieu of foreclosure, or any entity that includes the former owner or those with whom the former owner has or had family or business ties, obtains an ownership interest in the project or property. (4) The termination of the restrictions on the project does not terminate the participating jurisdiction's repayment obligation under § 92.503(b). (h) Tenant income. The income of each tenant must be determined initially in accordance with §92.203(a)(1)(i). In addition, each year during the period of affordability the project owner must re-examine each tenant's annual income in accordance with one of the options in § 92.203 selected by the participating jurisdiction. An owner of a multifamily project with an affordability period of ten years or more who re-examines tenant's annual income through a statement and certification in accordance with § 92.203(b)(1)(ii), must examine the income of each tenant, in accordance with § 92.203(b)(1)(i), every sixth year of the affordability period, except that, for units that receive Federal or State project-based rental subsidy, the owner must accept the income determination pursuant to § 92.203(a)(1). 24 CFR 92.203 Income determinations - (b) Required Documentation for Annual Income Calculations (1) For families who are tenants in HOME-assisted housing and not receiving HOME tenant-based rental assistance, the participating jurisdiction must initially determine annual income using the method in paragraph (b)(1)(i) of this section. For subsequent income determinations during the period of affordability, the participating jurisdiction may use any one of the following methods in accordance with §92.252(h): (i) Examine at least two months of source documents evidencing annual income (e.g., wage statement, interest statement, and unemployment compensation statement) for the family. (ii) Obtain from the family a written statement of the amount of the family's annual income and family size, along with a certification that the information is complete and accurate. The certification must state that the family will provide source documents upon request. (iii) Obtain a written statement from the administrator of a government program under which the family receives benefits, and which examines each year the annual income of the family. The statement must indicate the tenant's family size and state the amount of the family's annual income; or alternatively, the statement must indicate the current dollar limit for very low- or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. Title 45 US Code of Federal Regulations Part 75 (45 CFR part 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards, section 75.303 also states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The City was unable to collect documents from the property manager to ensure that individuals who occupied HOME assisted units were eligible tenants for four of the eight properties selected for testing from a population of seventy-four properties. The four properties for which documents could not be collected included a total of forty-two units, all related to the same development group. The City was unable to obtain the necessary documentation from the development groups property manager to verify household income for each tenant. As a result, it could not determine compliance with income eligibility, maximum rent limits, or minimum set-aside requirements for units designated for eligible individuals. Cause The City’s attempts to contact the development group for these properties have been unsuccessful, the city was therefore unable to obtain the required documents to assess each family's income which is needed for determining income eligibility, compliance with maximum rent requirements or minimum set-aside requirements for units designated for eligible individuals. The City has made continued attempts to contact the development group, though they have not yet been successful in obtaining the information. Effect or potential effect The lack of information available from the development group has meant the City is without the information needed to evaluate the properties and their related tenants for compliance with HUD eligibility criteria. Questioned costs None Context The City had eighteen outstanding loans with this development group for Multi Family Construction projects as of the fiscal year end, carrying a balance of $9.5m. This represents 12% of the 154 HOME Loans and their related $79.3m outstanding balances. Identification as a repeat finding if applicable 2023-002 Recommendation We recommend the City continue its attempts to obtain the necessary documents from the developer and exercising its rights to enforce compliance through the terms of its contractual arrangement when necessary. Additionally, we recommend the City enhance policies and/or procedure for addressing unresponsiveness among developers to establish a structure for clear communication, expectations, an escalation process, and consistent documentation requirements. Views of responsible officials and planned corrective actions The City continues to monitor HOME-assisted units to ensure eligibility with income requirements. Since the last audit period, the developer has not yet complied with multiple requests from the City to provide missing documentation; however, City staff continues outreach and has communicated shortcomings with said developer on the dates mentioned in FY 23 corrective action plan and also July 2, 2024, July 16, 2024, July 18, 2024, September 3, 2024, September 10, 2024, September 11, 2024, September 18, 2024, October 30, 2024, November 4, 2024, and December 2, 2024. The City informed the developer that continued non-compliance will result in escalation to the City Attorney, and escalation is currently underway. The City has updated procedures to add layers of review and increase frequency of communication with developers to ensure timely submission and efforts to obtain necessary documents. The City is confident that these measures will demonstrate compliance with eligibility requirements and resolve the auditor’s concerns.
Finding Number: 2024-002 Finding Title: Internal Controls and Compliance regarding the timeliness of Housing Quality Standards Inspections Compliance Requirement(s): Special Tests – Housing Quality Standards Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) § 92.251 Property standards and inspections - (3) Ongoing inspections of HOME-assisted rental housing. During the period of affordability, the participating jurisdiction must perform on-site inspections of HOME-assisted rental housing to determine compliance with the property standards in paragraph (f)(1) of this section and to verify the information submitted by owners in accordance with the requirements of § 92.252. The participating jurisdiction must perform inspections in accordance with its established inspection procedures. These procedures, at minimum, must include the following requirements: … (iii) Units inspected. Inspections must be based on a random sample of the HOME-assisted units in the project with a mix of unit sizes (e.g., a mix of one-bedroom, two-bedroom, and three-bedroom units) in accordance with the chart contained in this paragraph. All inspections must include the inspectable areas for each building containing HOME-assisted units. For projects with one-to-four HOME-assisted units, the participating jurisdiction must inspect 100 percent of the HOME-assisted units and the inspectable areas for each building with HOME-assisted units. HOMEfires - Vol. 3 No. 2, February 2001 - Q: The HOME Final Rule states that each Participating Jurisdiction must perform on-site inspections of HOME-assisted rental housing. How frequently should these inspections be performed? How should each PJ determine the number of units that must be inspected? A: During the affordability period, HOME-assisted rental projects must be inspected regularly to ensure that they continue to meet or exceed the property standards outlined in 24 CFR 92.251. Section 92.504 (d)(1) of the HOME final rule establishes a schedule for on-site inspections based on the total number of units in the project. The schedule is as follows: Projects containing one to four units must be inspected every three years Five-to-twenty-five-unit projects must be inspected every two years; and Projects with twenty-six or more units must be inspected annually. Please note that it is the total number of units in the project rather than the number of HOME-assisted units that determines the monitoring schedule. Section 92.504 (d)(1) also states that the inspections must be based on "a sufficient sample" of units. The Office of Affordable Housing has recommended that each PJ adopt the standard practice of inspecting fifteen to twenty percent of the HOME-assisted units in a project, and a minimum of one unit in every building. For identified in sample units, the PJ should inspect the remaining units to ensure that all HOME-assisted units comply with established property standards. The participating jurisdiction must establish written inspection procedures. The procedures must include detailed inspection checklists, a description of how and by whom inspections will be carried out, and procedures for training and certifying qualified inspectors. For ongoing property inspections, the procedures must also describe how frequently the property will be inspected, consistent with this section and § 92.209. 2 CFR 200.303 - Additionally, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure housing quality standards are appropriately performed and documented. Condition The City maintains a log to track housing quality standards inspections. The log lists all the projects, properties, total units, HOME units, required frequency of inspections, upcoming inspection due dates, and details on inspections including the unit number, date, and other details. Our testing included eight of a total seventy-four properties, none of which were inspected late. In reviewing the log, forty-two properties with 455 associated HOME units had either completed inspections late based on their required inspection date or were not yet completed and past their required inspection due date. Additionally 10 properties did not comply with HUDs 20% requirements for sampling with incorrect inspection frequency requirements listed in the log, and another 9 items did not meet the required sampling sizes as noted in Table 1 Paragraph (f)(3)(iii)—minimum Inspection Sample Size for Home Rental Housing Project in 24 CFR 92.251. Cause The City is working through a backlog of inspections due to staffing constraints which occurred in the prior year that caused a knock-on effect to inspections in the current year. Effect or potential effect Late or delayed inspections could lead to unidentified issues with housing leading to increased costs and non-compliance with HUD requirements related to the inspection process. Questioned costs None Context The City is currently responsible for seventy-four properties which include 1948 units, 1054 of which are HOME units. The City completed 227 inspections during the year per the log. Identification as a repeat finding if applicable 2023-003 Recommendation We recommend the City continue with its steps towards addressing resource constraints and implement a periodic review of the inspection log for accuracy, completeness and earlier identification of late inspections. Views of responsible officials and planned corrective actions Ensuring compliance with HUD requirements continues to be a central priority, and the City is actively enhancing our procedures to strengthen the Housing Quality Standards (HQS) process. The City is working to reduce the backlog of inspections by September 30, 2025, which requires additional effort in order to complete both the prior year inspections in addition to completing the current year inspections in a timely manner. To this end, the City has increased the number of properties inspected each fiscal year. For example, during the FY23 audit period, 204 inspections occurred. In the FY24 period, the number of inspections increased to 227. As of May 2025, the City has inspected 187 units and anticipates a total of 250 inspections will be completed by the end of FY25, thereby eliminating the current backlog and any late inspections. The Community Development Department implemented more proactive measures, including hiring an in-house inspector and an active master inspection log to track and target upcoming inspections. These efforts have resulted in a more streamlined, data-informed approach to HQS compliance, as evidenced by a significant reduction in the inspection backlog. The master inspection log is also being leveraged to optimize inspection scheduling and ensure that the required HOME units per property are inspected as required. To reinforce this approach, the City instituted a structured, monthly review of the log to improve data accuracy, completeness, and early identification of potential delays. The City is confident that these measures will demonstrate compliance with the HQS standards and resolve the auditor’s concerns.
Finding Number: 2024-002 Finding Title: Internal Controls and Compliance regarding the timeliness of Housing Quality Standards Inspections Compliance Requirement(s): Special Tests – Housing Quality Standards Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) § 92.251 Property standards and inspections - (3) Ongoing inspections of HOME-assisted rental housing. During the period of affordability, the participating jurisdiction must perform on-site inspections of HOME-assisted rental housing to determine compliance with the property standards in paragraph (f)(1) of this section and to verify the information submitted by owners in accordance with the requirements of § 92.252. The participating jurisdiction must perform inspections in accordance with its established inspection procedures. These procedures, at minimum, must include the following requirements: … (iii) Units inspected. Inspections must be based on a random sample of the HOME-assisted units in the project with a mix of unit sizes (e.g., a mix of one-bedroom, two-bedroom, and three-bedroom units) in accordance with the chart contained in this paragraph. All inspections must include the inspectable areas for each building containing HOME-assisted units. For projects with one-to-four HOME-assisted units, the participating jurisdiction must inspect 100 percent of the HOME-assisted units and the inspectable areas for each building with HOME-assisted units. HOMEfires - Vol. 3 No. 2, February 2001 - Q: The HOME Final Rule states that each Participating Jurisdiction must perform on-site inspections of HOME-assisted rental housing. How frequently should these inspections be performed? How should each PJ determine the number of units that must be inspected? A: During the affordability period, HOME-assisted rental projects must be inspected regularly to ensure that they continue to meet or exceed the property standards outlined in 24 CFR 92.251. Section 92.504 (d)(1) of the HOME final rule establishes a schedule for on-site inspections based on the total number of units in the project. The schedule is as follows: Projects containing one to four units must be inspected every three years Five-to-twenty-five-unit projects must be inspected every two years; and Projects with twenty-six or more units must be inspected annually. Please note that it is the total number of units in the project rather than the number of HOME-assisted units that determines the monitoring schedule. Section 92.504 (d)(1) also states that the inspections must be based on "a sufficient sample" of units. The Office of Affordable Housing has recommended that each PJ adopt the standard practice of inspecting fifteen to twenty percent of the HOME-assisted units in a project, and a minimum of one unit in every building. For identified in sample units, the PJ should inspect the remaining units to ensure that all HOME-assisted units comply with established property standards. The participating jurisdiction must establish written inspection procedures. The procedures must include detailed inspection checklists, a description of how and by whom inspections will be carried out, and procedures for training and certifying qualified inspectors. For ongoing property inspections, the procedures must also describe how frequently the property will be inspected, consistent with this section and § 92.209. 2 CFR 200.303 - Additionally, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure housing quality standards are appropriately performed and documented. Condition The City maintains a log to track housing quality standards inspections. The log lists all the projects, properties, total units, HOME units, required frequency of inspections, upcoming inspection due dates, and details on inspections including the unit number, date, and other details. Our testing included eight of a total seventy-four properties, none of which were inspected late. In reviewing the log, forty-two properties with 455 associated HOME units had either completed inspections late based on their required inspection date or were not yet completed and past their required inspection due date. Additionally 10 properties did not comply with HUDs 20% requirements for sampling with incorrect inspection frequency requirements listed in the log, and another 9 items did not meet the required sampling sizes as noted in Table 1 Paragraph (f)(3)(iii)—minimum Inspection Sample Size for Home Rental Housing Project in 24 CFR 92.251. Cause The City is working through a backlog of inspections due to staffing constraints which occurred in the prior year that caused a knock-on effect to inspections in the current year. Effect or potential effect Late or delayed inspections could lead to unidentified issues with housing leading to increased costs and non-compliance with HUD requirements related to the inspection process. Questioned costs None Context The City is currently responsible for seventy-four properties which include 1948 units, 1054 of which are HOME units. The City completed 227 inspections during the year per the log. Identification as a repeat finding if applicable 2023-003 Recommendation We recommend the City continue with its steps towards addressing resource constraints and implement a periodic review of the inspection log for accuracy, completeness and earlier identification of late inspections. Views of responsible officials and planned corrective actions Ensuring compliance with HUD requirements continues to be a central priority, and the City is actively enhancing our procedures to strengthen the Housing Quality Standards (HQS) process. The City is working to reduce the backlog of inspections by September 30, 2025, which requires additional effort in order to complete both the prior year inspections in addition to completing the current year inspections in a timely manner. To this end, the City has increased the number of properties inspected each fiscal year. For example, during the FY23 audit period, 204 inspections occurred. In the FY24 period, the number of inspections increased to 227. As of May 2025, the City has inspected 187 units and anticipates a total of 250 inspections will be completed by the end of FY25, thereby eliminating the current backlog and any late inspections. The Community Development Department implemented more proactive measures, including hiring an in-house inspector and an active master inspection log to track and target upcoming inspections. These efforts have resulted in a more streamlined, data-informed approach to HQS compliance, as evidenced by a significant reduction in the inspection backlog. The master inspection log is also being leveraged to optimize inspection scheduling and ensure that the required HOME units per property are inspected as required. To reinforce this approach, the City instituted a structured, monthly review of the log to improve data accuracy, completeness, and early identification of potential delays. The City is confident that these measures will demonstrate compliance with the HQS standards and resolve the auditor’s concerns.
Finding Number: 2024-002 Finding Title: Internal Controls and Compliance regarding the timeliness of Housing Quality Standards Inspections Compliance Requirement(s): Special Tests – Housing Quality Standards Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) § 92.251 Property standards and inspections - (3) Ongoing inspections of HOME-assisted rental housing. During the period of affordability, the participating jurisdiction must perform on-site inspections of HOME-assisted rental housing to determine compliance with the property standards in paragraph (f)(1) of this section and to verify the information submitted by owners in accordance with the requirements of § 92.252. The participating jurisdiction must perform inspections in accordance with its established inspection procedures. These procedures, at minimum, must include the following requirements: … (iii) Units inspected. Inspections must be based on a random sample of the HOME-assisted units in the project with a mix of unit sizes (e.g., a mix of one-bedroom, two-bedroom, and three-bedroom units) in accordance with the chart contained in this paragraph. All inspections must include the inspectable areas for each building containing HOME-assisted units. For projects with one-to-four HOME-assisted units, the participating jurisdiction must inspect 100 percent of the HOME-assisted units and the inspectable areas for each building with HOME-assisted units. HOMEfires - Vol. 3 No. 2, February 2001 - Q: The HOME Final Rule states that each Participating Jurisdiction must perform on-site inspections of HOME-assisted rental housing. How frequently should these inspections be performed? How should each PJ determine the number of units that must be inspected? A: During the affordability period, HOME-assisted rental projects must be inspected regularly to ensure that they continue to meet or exceed the property standards outlined in 24 CFR 92.251. Section 92.504 (d)(1) of the HOME final rule establishes a schedule for on-site inspections based on the total number of units in the project. The schedule is as follows: Projects containing one to four units must be inspected every three years Five-to-twenty-five-unit projects must be inspected every two years; and Projects with twenty-six or more units must be inspected annually. Please note that it is the total number of units in the project rather than the number of HOME-assisted units that determines the monitoring schedule. Section 92.504 (d)(1) also states that the inspections must be based on "a sufficient sample" of units. The Office of Affordable Housing has recommended that each PJ adopt the standard practice of inspecting fifteen to twenty percent of the HOME-assisted units in a project, and a minimum of one unit in every building. For identified in sample units, the PJ should inspect the remaining units to ensure that all HOME-assisted units comply with established property standards. The participating jurisdiction must establish written inspection procedures. The procedures must include detailed inspection checklists, a description of how and by whom inspections will be carried out, and procedures for training and certifying qualified inspectors. For ongoing property inspections, the procedures must also describe how frequently the property will be inspected, consistent with this section and § 92.209. 2 CFR 200.303 - Additionally, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure housing quality standards are appropriately performed and documented. Condition The City maintains a log to track housing quality standards inspections. The log lists all the projects, properties, total units, HOME units, required frequency of inspections, upcoming inspection due dates, and details on inspections including the unit number, date, and other details. Our testing included eight of a total seventy-four properties, none of which were inspected late. In reviewing the log, forty-two properties with 455 associated HOME units had either completed inspections late based on their required inspection date or were not yet completed and past their required inspection due date. Additionally 10 properties did not comply with HUDs 20% requirements for sampling with incorrect inspection frequency requirements listed in the log, and another 9 items did not meet the required sampling sizes as noted in Table 1 Paragraph (f)(3)(iii)—minimum Inspection Sample Size for Home Rental Housing Project in 24 CFR 92.251. Cause The City is working through a backlog of inspections due to staffing constraints which occurred in the prior year that caused a knock-on effect to inspections in the current year. Effect or potential effect Late or delayed inspections could lead to unidentified issues with housing leading to increased costs and non-compliance with HUD requirements related to the inspection process. Questioned costs None Context The City is currently responsible for seventy-four properties which include 1948 units, 1054 of which are HOME units. The City completed 227 inspections during the year per the log. Identification as a repeat finding if applicable 2023-003 Recommendation We recommend the City continue with its steps towards addressing resource constraints and implement a periodic review of the inspection log for accuracy, completeness and earlier identification of late inspections. Views of responsible officials and planned corrective actions Ensuring compliance with HUD requirements continues to be a central priority, and the City is actively enhancing our procedures to strengthen the Housing Quality Standards (HQS) process. The City is working to reduce the backlog of inspections by September 30, 2025, which requires additional effort in order to complete both the prior year inspections in addition to completing the current year inspections in a timely manner. To this end, the City has increased the number of properties inspected each fiscal year. For example, during the FY23 audit period, 204 inspections occurred. In the FY24 period, the number of inspections increased to 227. As of May 2025, the City has inspected 187 units and anticipates a total of 250 inspections will be completed by the end of FY25, thereby eliminating the current backlog and any late inspections. The Community Development Department implemented more proactive measures, including hiring an in-house inspector and an active master inspection log to track and target upcoming inspections. These efforts have resulted in a more streamlined, data-informed approach to HQS compliance, as evidenced by a significant reduction in the inspection backlog. The master inspection log is also being leveraged to optimize inspection scheduling and ensure that the required HOME units per property are inspected as required. To reinforce this approach, the City instituted a structured, monthly review of the log to improve data accuracy, completeness, and early identification of potential delays. The City is confident that these measures will demonstrate compliance with the HQS standards and resolve the auditor’s concerns.
Finding Number: 2024-002 Finding Title: Internal Controls and Compliance regarding the timeliness of Housing Quality Standards Inspections Compliance Requirement(s): Special Tests – Housing Quality Standards Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) § 92.251 Property standards and inspections - (3) Ongoing inspections of HOME-assisted rental housing. During the period of affordability, the participating jurisdiction must perform on-site inspections of HOME-assisted rental housing to determine compliance with the property standards in paragraph (f)(1) of this section and to verify the information submitted by owners in accordance with the requirements of § 92.252. The participating jurisdiction must perform inspections in accordance with its established inspection procedures. These procedures, at minimum, must include the following requirements: … (iii) Units inspected. Inspections must be based on a random sample of the HOME-assisted units in the project with a mix of unit sizes (e.g., a mix of one-bedroom, two-bedroom, and three-bedroom units) in accordance with the chart contained in this paragraph. All inspections must include the inspectable areas for each building containing HOME-assisted units. For projects with one-to-four HOME-assisted units, the participating jurisdiction must inspect 100 percent of the HOME-assisted units and the inspectable areas for each building with HOME-assisted units. HOMEfires - Vol. 3 No. 2, February 2001 - Q: The HOME Final Rule states that each Participating Jurisdiction must perform on-site inspections of HOME-assisted rental housing. How frequently should these inspections be performed? How should each PJ determine the number of units that must be inspected? A: During the affordability period, HOME-assisted rental projects must be inspected regularly to ensure that they continue to meet or exceed the property standards outlined in 24 CFR 92.251. Section 92.504 (d)(1) of the HOME final rule establishes a schedule for on-site inspections based on the total number of units in the project. The schedule is as follows: Projects containing one to four units must be inspected every three years Five-to-twenty-five-unit projects must be inspected every two years; and Projects with twenty-six or more units must be inspected annually. Please note that it is the total number of units in the project rather than the number of HOME-assisted units that determines the monitoring schedule. Section 92.504 (d)(1) also states that the inspections must be based on "a sufficient sample" of units. The Office of Affordable Housing has recommended that each PJ adopt the standard practice of inspecting fifteen to twenty percent of the HOME-assisted units in a project, and a minimum of one unit in every building. For identified in sample units, the PJ should inspect the remaining units to ensure that all HOME-assisted units comply with established property standards. The participating jurisdiction must establish written inspection procedures. The procedures must include detailed inspection checklists, a description of how and by whom inspections will be carried out, and procedures for training and certifying qualified inspectors. For ongoing property inspections, the procedures must also describe how frequently the property will be inspected, consistent with this section and § 92.209. 2 CFR 200.303 - Additionally, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure housing quality standards are appropriately performed and documented. Condition The City maintains a log to track housing quality standards inspections. The log lists all the projects, properties, total units, HOME units, required frequency of inspections, upcoming inspection due dates, and details on inspections including the unit number, date, and other details. Our testing included eight of a total seventy-four properties, none of which were inspected late. In reviewing the log, forty-two properties with 455 associated HOME units had either completed inspections late based on their required inspection date or were not yet completed and past their required inspection due date. Additionally 10 properties did not comply with HUDs 20% requirements for sampling with incorrect inspection frequency requirements listed in the log, and another 9 items did not meet the required sampling sizes as noted in Table 1 Paragraph (f)(3)(iii)—minimum Inspection Sample Size for Home Rental Housing Project in 24 CFR 92.251. Cause The City is working through a backlog of inspections due to staffing constraints which occurred in the prior year that caused a knock-on effect to inspections in the current year. Effect or potential effect Late or delayed inspections could lead to unidentified issues with housing leading to increased costs and non-compliance with HUD requirements related to the inspection process. Questioned costs None Context The City is currently responsible for seventy-four properties which include 1948 units, 1054 of which are HOME units. The City completed 227 inspections during the year per the log. Identification as a repeat finding if applicable 2023-003 Recommendation We recommend the City continue with its steps towards addressing resource constraints and implement a periodic review of the inspection log for accuracy, completeness and earlier identification of late inspections. Views of responsible officials and planned corrective actions Ensuring compliance with HUD requirements continues to be a central priority, and the City is actively enhancing our procedures to strengthen the Housing Quality Standards (HQS) process. The City is working to reduce the backlog of inspections by September 30, 2025, which requires additional effort in order to complete both the prior year inspections in addition to completing the current year inspections in a timely manner. To this end, the City has increased the number of properties inspected each fiscal year. For example, during the FY23 audit period, 204 inspections occurred. In the FY24 period, the number of inspections increased to 227. As of May 2025, the City has inspected 187 units and anticipates a total of 250 inspections will be completed by the end of FY25, thereby eliminating the current backlog and any late inspections. The Community Development Department implemented more proactive measures, including hiring an in-house inspector and an active master inspection log to track and target upcoming inspections. These efforts have resulted in a more streamlined, data-informed approach to HQS compliance, as evidenced by a significant reduction in the inspection backlog. The master inspection log is also being leveraged to optimize inspection scheduling and ensure that the required HOME units per property are inspected as required. To reinforce this approach, the City instituted a structured, monthly review of the log to improve data accuracy, completeness, and early identification of potential delays. The City is confident that these measures will demonstrate compliance with the HQS standards and resolve the auditor’s concerns.
Finding Number: 2024-002 Finding Title: Internal Controls and Compliance regarding the timeliness of Housing Quality Standards Inspections Compliance Requirement(s): Special Tests – Housing Quality Standards Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) § 92.251 Property standards and inspections - (3) Ongoing inspections of HOME-assisted rental housing. During the period of affordability, the participating jurisdiction must perform on-site inspections of HOME-assisted rental housing to determine compliance with the property standards in paragraph (f)(1) of this section and to verify the information submitted by owners in accordance with the requirements of § 92.252. The participating jurisdiction must perform inspections in accordance with its established inspection procedures. These procedures, at minimum, must include the following requirements: … (iii) Units inspected. Inspections must be based on a random sample of the HOME-assisted units in the project with a mix of unit sizes (e.g., a mix of one-bedroom, two-bedroom, and three-bedroom units) in accordance with the chart contained in this paragraph. All inspections must include the inspectable areas for each building containing HOME-assisted units. For projects with one-to-four HOME-assisted units, the participating jurisdiction must inspect 100 percent of the HOME-assisted units and the inspectable areas for each building with HOME-assisted units. HOMEfires - Vol. 3 No. 2, February 2001 - Q: The HOME Final Rule states that each Participating Jurisdiction must perform on-site inspections of HOME-assisted rental housing. How frequently should these inspections be performed? How should each PJ determine the number of units that must be inspected? A: During the affordability period, HOME-assisted rental projects must be inspected regularly to ensure that they continue to meet or exceed the property standards outlined in 24 CFR 92.251. Section 92.504 (d)(1) of the HOME final rule establishes a schedule for on-site inspections based on the total number of units in the project. The schedule is as follows: Projects containing one to four units must be inspected every three years Five-to-twenty-five-unit projects must be inspected every two years; and Projects with twenty-six or more units must be inspected annually. Please note that it is the total number of units in the project rather than the number of HOME-assisted units that determines the monitoring schedule. Section 92.504 (d)(1) also states that the inspections must be based on "a sufficient sample" of units. The Office of Affordable Housing has recommended that each PJ adopt the standard practice of inspecting fifteen to twenty percent of the HOME-assisted units in a project, and a minimum of one unit in every building. For identified in sample units, the PJ should inspect the remaining units to ensure that all HOME-assisted units comply with established property standards. The participating jurisdiction must establish written inspection procedures. The procedures must include detailed inspection checklists, a description of how and by whom inspections will be carried out, and procedures for training and certifying qualified inspectors. For ongoing property inspections, the procedures must also describe how frequently the property will be inspected, consistent with this section and § 92.209. 2 CFR 200.303 - Additionally, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure housing quality standards are appropriately performed and documented. Condition The City maintains a log to track housing quality standards inspections. The log lists all the projects, properties, total units, HOME units, required frequency of inspections, upcoming inspection due dates, and details on inspections including the unit number, date, and other details. Our testing included eight of a total seventy-four properties, none of which were inspected late. In reviewing the log, forty-two properties with 455 associated HOME units had either completed inspections late based on their required inspection date or were not yet completed and past their required inspection due date. Additionally 10 properties did not comply with HUDs 20% requirements for sampling with incorrect inspection frequency requirements listed in the log, and another 9 items did not meet the required sampling sizes as noted in Table 1 Paragraph (f)(3)(iii)—minimum Inspection Sample Size for Home Rental Housing Project in 24 CFR 92.251. Cause The City is working through a backlog of inspections due to staffing constraints which occurred in the prior year that caused a knock-on effect to inspections in the current year. Effect or potential effect Late or delayed inspections could lead to unidentified issues with housing leading to increased costs and non-compliance with HUD requirements related to the inspection process. Questioned costs None Context The City is currently responsible for seventy-four properties which include 1948 units, 1054 of which are HOME units. The City completed 227 inspections during the year per the log. Identification as a repeat finding if applicable 2023-003 Recommendation We recommend the City continue with its steps towards addressing resource constraints and implement a periodic review of the inspection log for accuracy, completeness and earlier identification of late inspections. Views of responsible officials and planned corrective actions Ensuring compliance with HUD requirements continues to be a central priority, and the City is actively enhancing our procedures to strengthen the Housing Quality Standards (HQS) process. The City is working to reduce the backlog of inspections by September 30, 2025, which requires additional effort in order to complete both the prior year inspections in addition to completing the current year inspections in a timely manner. To this end, the City has increased the number of properties inspected each fiscal year. For example, during the FY23 audit period, 204 inspections occurred. In the FY24 period, the number of inspections increased to 227. As of May 2025, the City has inspected 187 units and anticipates a total of 250 inspections will be completed by the end of FY25, thereby eliminating the current backlog and any late inspections. The Community Development Department implemented more proactive measures, including hiring an in-house inspector and an active master inspection log to track and target upcoming inspections. These efforts have resulted in a more streamlined, data-informed approach to HQS compliance, as evidenced by a significant reduction in the inspection backlog. The master inspection log is also being leveraged to optimize inspection scheduling and ensure that the required HOME units per property are inspected as required. To reinforce this approach, the City instituted a structured, monthly review of the log to improve data accuracy, completeness, and early identification of potential delays. The City is confident that these measures will demonstrate compliance with the HQS standards and resolve the auditor’s concerns.
Finding Number: 2024-002 Finding Title: Internal Controls and Compliance regarding the timeliness of Housing Quality Standards Inspections Compliance Requirement(s): Special Tests – Housing Quality Standards Classification: Material Weakness Programs: Home Investment Partnerships Program ALN #: 14.239 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Numbers: M20-MC060518, M21-MP060518, M21-MC060518, M22-MC060518, M23-MC060518 Federal Award Year: 2020, 2021, 2022, 2023 Criteria or specific requirement (including statutory, regulatory, or other citation) § 92.251 Property standards and inspections - (3) Ongoing inspections of HOME-assisted rental housing. During the period of affordability, the participating jurisdiction must perform on-site inspections of HOME-assisted rental housing to determine compliance with the property standards in paragraph (f)(1) of this section and to verify the information submitted by owners in accordance with the requirements of § 92.252. The participating jurisdiction must perform inspections in accordance with its established inspection procedures. These procedures, at minimum, must include the following requirements: … (iii) Units inspected. Inspections must be based on a random sample of the HOME-assisted units in the project with a mix of unit sizes (e.g., a mix of one-bedroom, two-bedroom, and three-bedroom units) in accordance with the chart contained in this paragraph. All inspections must include the inspectable areas for each building containing HOME-assisted units. For projects with one-to-four HOME-assisted units, the participating jurisdiction must inspect 100 percent of the HOME-assisted units and the inspectable areas for each building with HOME-assisted units. HOMEfires - Vol. 3 No. 2, February 2001 - Q: The HOME Final Rule states that each Participating Jurisdiction must perform on-site inspections of HOME-assisted rental housing. How frequently should these inspections be performed? How should each PJ determine the number of units that must be inspected? A: During the affordability period, HOME-assisted rental projects must be inspected regularly to ensure that they continue to meet or exceed the property standards outlined in 24 CFR 92.251. Section 92.504 (d)(1) of the HOME final rule establishes a schedule for on-site inspections based on the total number of units in the project. The schedule is as follows: Projects containing one to four units must be inspected every three years Five-to-twenty-five-unit projects must be inspected every two years; and Projects with twenty-six or more units must be inspected annually. Please note that it is the total number of units in the project rather than the number of HOME-assisted units that determines the monitoring schedule. Section 92.504 (d)(1) also states that the inspections must be based on "a sufficient sample" of units. The Office of Affordable Housing has recommended that each PJ adopt the standard practice of inspecting fifteen to twenty percent of the HOME-assisted units in a project, and a minimum of one unit in every building. For identified in sample units, the PJ should inspect the remaining units to ensure that all HOME-assisted units comply with established property standards. The participating jurisdiction must establish written inspection procedures. The procedures must include detailed inspection checklists, a description of how and by whom inspections will be carried out, and procedures for training and certifying qualified inspectors. For ongoing property inspections, the procedures must also describe how frequently the property will be inspected, consistent with this section and § 92.209. 2 CFR 200.303 - Additionally, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designated to ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure housing quality standards are appropriately performed and documented. Condition The City maintains a log to track housing quality standards inspections. The log lists all the projects, properties, total units, HOME units, required frequency of inspections, upcoming inspection due dates, and details on inspections including the unit number, date, and other details. Our testing included eight of a total seventy-four properties, none of which were inspected late. In reviewing the log, forty-two properties with 455 associated HOME units had either completed inspections late based on their required inspection date or were not yet completed and past their required inspection due date. Additionally 10 properties did not comply with HUDs 20% requirements for sampling with incorrect inspection frequency requirements listed in the log, and another 9 items did not meet the required sampling sizes as noted in Table 1 Paragraph (f)(3)(iii)—minimum Inspection Sample Size for Home Rental Housing Project in 24 CFR 92.251. Cause The City is working through a backlog of inspections due to staffing constraints which occurred in the prior year that caused a knock-on effect to inspections in the current year. Effect or potential effect Late or delayed inspections could lead to unidentified issues with housing leading to increased costs and non-compliance with HUD requirements related to the inspection process. Questioned costs None Context The City is currently responsible for seventy-four properties which include 1948 units, 1054 of which are HOME units. The City completed 227 inspections during the year per the log. Identification as a repeat finding if applicable 2023-003 Recommendation We recommend the City continue with its steps towards addressing resource constraints and implement a periodic review of the inspection log for accuracy, completeness and earlier identification of late inspections. Views of responsible officials and planned corrective actions Ensuring compliance with HUD requirements continues to be a central priority, and the City is actively enhancing our procedures to strengthen the Housing Quality Standards (HQS) process. The City is working to reduce the backlog of inspections by September 30, 2025, which requires additional effort in order to complete both the prior year inspections in addition to completing the current year inspections in a timely manner. To this end, the City has increased the number of properties inspected each fiscal year. For example, during the FY23 audit period, 204 inspections occurred. In the FY24 period, the number of inspections increased to 227. As of May 2025, the City has inspected 187 units and anticipates a total of 250 inspections will be completed by the end of FY25, thereby eliminating the current backlog and any late inspections. The Community Development Department implemented more proactive measures, including hiring an in-house inspector and an active master inspection log to track and target upcoming inspections. These efforts have resulted in a more streamlined, data-informed approach to HQS compliance, as evidenced by a significant reduction in the inspection backlog. The master inspection log is also being leveraged to optimize inspection scheduling and ensure that the required HOME units per property are inspected as required. To reinforce this approach, the City instituted a structured, monthly review of the log to improve data accuracy, completeness, and early identification of potential delays. The City is confident that these measures will demonstrate compliance with the HQS standards and resolve the auditor’s concerns.
Finding Number: 2024-005 Finding Title: Internal Controls over Compliance of Reinspection’s to Enforce Housing Quality Standards Compliance Requirement(s): Special Tests – Housing Quality Standards Enforcement Classification: Material Weakness Programs: Section 8 Housing Choice Vouchers ALN #: 14.871 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development (HUD) Federal Award Numbers: Multiple – City receives incremental funding throughout the year Federal Award Year: 2024 Criteria or specific requirement (including statutory, regulatory, or other citation PART 982—SECTION 8 TENANT-BASED ASSISTANCE: HOUSING CHOICE VOUCHER PROGRAM 24 CFR 982.54(d)(21) Procedural guidelines and performance standards for conducting required HQS inspections, including: (i) Any deficiency that the Public Housing Authority (PHA) has adopted as a life-threatening deficiency that is not a HUD-required life-threatening deficiency (ii) For PHAs that adopt the initial inspection non-life-threatening deficiency option: a. The PHA's policy on whether the provision will apply to all initial inspections or a portion of initial inspections. b. The PHA's policy on whether the provision will be applied to only some inspections and how the units will be selected. c. The PHA's policy on using withheld HAP funds to repay an owner once the unit is in compliance with HQS. (iii) For PHAs that adopt the alternative inspection provision: a. The PHA's policy on how it will apply the provision to initial and periodic inspections. b. he specific alternative inspection method used by the PHA. c. The specific properties or types of properties where the alternative inspection method will be employed. d. For initial inspections, the maximum amount of time the PHA will withhold HAP if the owner does not correct the HQS deficiencies within the cure period, and the period of time after which the PHA will terminate the HAP contract for the owner's failure to correct the deficiencies, which may not exceed 180 days from the effective date of the HAP contract. (iv) The PHA's policy on charging a reinspection fee to owners. 24 CFR 982.54(d)(22) The PHA's policy on withholding HAP for units that do not meet HQS (see § 982.404(d)(1)) 24 CFR 982.406(e)(5) The PHA may commence housing assistance payments to the owner and make housing assistance payments retroactive to the effective date of the HAP contract only after the unit passes the PHA's HQS inspection. If the unit does not pass the HQS inspection, the PHA may not make housing assistance payments to the owner until all the deficiencies have been corrected. If a deficiency is life-threatening, the owner must correct the deficiency within 24 hours of notification from the PHA. For other deficiencies, the owner must correct the deficiency within no more than 30 calendar days (or any PHA-approved extension) of notification from the PHA. If the owner corrects the deficiencies within the required cure period, the PHA makes the housing assistance payments retroactive to the effective date of the HAP contract. PHA POLICY 8-II.F. INSPECTION RESULTS AND REINSPECTIONS FOR UNITS UNDER HAP CONTRACT The city of Long Beach PHA Admin Plan requires that each deficiency is identified in the NPSIRE standards as either life-threatening, severe, moderate, or low. Further indicating that units under HAP contract, must correct for life-threatening deficiencies within 24 hours after notice has been provided and all others must be corrected within 30 days (or a PHA-approved extension) after notice has been provided. Life-threatening deficiencies require notifying both parties by telephone or email immediately while Severe or moderate deficiencies will be provided through a written notification within five business days of the inspection. Both will include specifying who is responsible for correcting the violation and the time frame within which the failure must be corrected. If low deficiencies are identified, these deficiencies will only be noted for informational purposes. The notice will inform the party which caused the deficiencies, whether owner or family, that if life-threatening conditions are not corrected within 24 hours, and non-life-threatening conditions are not corrected within the specified time frame (or any PHA-approved extension), the owner’s HAP will be abated in accordance with PHA policy (Section 8-II.G.) or the family’s assistance will be terminated in accordance with PHA policy (Chapter 12). 2 CFR 200 SUBPART D – POST FEDERAL AWARD REQUIREMENTS 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The PHA did not have sufficient internal controls in place to ensure timely reinspection of initial inspections for housing quality standard enforcement leading to eighteen re-inspections which were not completed within the required time frames set by PHA policy, created in accordance with federal requirements. The inspections selected were categorized as severe or moderate deficiencies, allowing for a 30 day period starting after providing notification of inspection results which must occur within 5 days of the inspection completion (or effectively 35 days), the eighteen samples mentioned were completed after this window causing the PHA to be noncompliant with PHA policy 8-II.F and 24 CFR 982.406(e)(5). Additionally, one tenant failed inspection in October 2023 before failing a subsequent reinspection in December 2023. No further action was taken by the PHA, and the case was closed without resolving the deficiencies that caused the inspections to fail leading to noncompliance with 24 CFR 982.406(e)(5) and PHA policy 8-II.F. Cause The delayed reinspection’s and mistakenly closed inspection were due to constraints on resources and a change in the system utilized by the authority to administer the program during the year. Effect or potential effect The PHA did not perform necessary procedures to enforce owner and/or family obligations to correct deficiencies, which if unresolved, could lead to housing assistance payments to either party which should have been abated. Questioned costs None Context Sixty inspections requiring reinspection were selected for testing, eighteen were found to be completed after the required reinspection date. Late reinspection’s ranged from 1 day late to over a year late. One of the failed re-inspections cases was closed by management prior to resolution of identified deficiencies. None of the 60 samples selected were categorized as “life threatening”. Identification as a repeat finding if applicable 2023-008 Recommendation We recommend the Authority enhance internal controls over the timeliness and completeness of its the housing quality standard enforcement procedures. Views of responsible officials and planned corrective actions The HACLB acknowledges the importance of timely reinspections to ensure compliance with Housing Quality Standards (HQS) and has taken concrete steps to strengthen its internal controls and enforcement mechanisms. To strengthen compliance and reduce delays, HACLB implemented an enhanced reinspection scheduling process in December 2024, using its MRI housing software to automatically schedule reinspections within the 30-day remediation period. The system also tracks extension requests and approvals, while staff regularly monitor system-generated reports to ensure timely follow-up and adherence to HUD standards. These improvements are designed to ensure that repairs are verified within the required timeframe, increase program compliance, and improve the overall quality of housing for HCV participants. HACLB is committed to ongoing monitoring and refinement of this process to ensure continuous improvement.
Finding Number: 2024-005 Finding Title: Internal Controls over Compliance of Reinspection’s to Enforce Housing Quality Standards Compliance Requirement(s): Special Tests – Housing Quality Standards Enforcement Classification: Material Weakness Programs: Section 8 Housing Choice Vouchers ALN #: 14.871 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development (HUD) Federal Award Numbers: Multiple – City receives incremental funding throughout the year Federal Award Year: 2024 Criteria or specific requirement (including statutory, regulatory, or other citation PART 982—SECTION 8 TENANT-BASED ASSISTANCE: HOUSING CHOICE VOUCHER PROGRAM 24 CFR 982.54(d)(21) Procedural guidelines and performance standards for conducting required HQS inspections, including: (i) Any deficiency that the Public Housing Authority (PHA) has adopted as a life-threatening deficiency that is not a HUD-required life-threatening deficiency (ii) For PHAs that adopt the initial inspection non-life-threatening deficiency option: a. The PHA's policy on whether the provision will apply to all initial inspections or a portion of initial inspections. b. The PHA's policy on whether the provision will be applied to only some inspections and how the units will be selected. c. The PHA's policy on using withheld HAP funds to repay an owner once the unit is in compliance with HQS. (iii) For PHAs that adopt the alternative inspection provision: a. The PHA's policy on how it will apply the provision to initial and periodic inspections. b. he specific alternative inspection method used by the PHA. c. The specific properties or types of properties where the alternative inspection method will be employed. d. For initial inspections, the maximum amount of time the PHA will withhold HAP if the owner does not correct the HQS deficiencies within the cure period, and the period of time after which the PHA will terminate the HAP contract for the owner's failure to correct the deficiencies, which may not exceed 180 days from the effective date of the HAP contract. (iv) The PHA's policy on charging a reinspection fee to owners. 24 CFR 982.54(d)(22) The PHA's policy on withholding HAP for units that do not meet HQS (see § 982.404(d)(1)) 24 CFR 982.406(e)(5) The PHA may commence housing assistance payments to the owner and make housing assistance payments retroactive to the effective date of the HAP contract only after the unit passes the PHA's HQS inspection. If the unit does not pass the HQS inspection, the PHA may not make housing assistance payments to the owner until all the deficiencies have been corrected. If a deficiency is life-threatening, the owner must correct the deficiency within 24 hours of notification from the PHA. For other deficiencies, the owner must correct the deficiency within no more than 30 calendar days (or any PHA-approved extension) of notification from the PHA. If the owner corrects the deficiencies within the required cure period, the PHA makes the housing assistance payments retroactive to the effective date of the HAP contract. PHA POLICY 8-II.F. INSPECTION RESULTS AND REINSPECTIONS FOR UNITS UNDER HAP CONTRACT The city of Long Beach PHA Admin Plan requires that each deficiency is identified in the NPSIRE standards as either life-threatening, severe, moderate, or low. Further indicating that units under HAP contract, must correct for life-threatening deficiencies within 24 hours after notice has been provided and all others must be corrected within 30 days (or a PHA-approved extension) after notice has been provided. Life-threatening deficiencies require notifying both parties by telephone or email immediately while Severe or moderate deficiencies will be provided through a written notification within five business days of the inspection. Both will include specifying who is responsible for correcting the violation and the time frame within which the failure must be corrected. If low deficiencies are identified, these deficiencies will only be noted for informational purposes. The notice will inform the party which caused the deficiencies, whether owner or family, that if life-threatening conditions are not corrected within 24 hours, and non-life-threatening conditions are not corrected within the specified time frame (or any PHA-approved extension), the owner’s HAP will be abated in accordance with PHA policy (Section 8-II.G.) or the family’s assistance will be terminated in accordance with PHA policy (Chapter 12). 2 CFR 200 SUBPART D – POST FEDERAL AWARD REQUIREMENTS 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The PHA did not have sufficient internal controls in place to ensure timely reinspection of initial inspections for housing quality standard enforcement leading to eighteen re-inspections which were not completed within the required time frames set by PHA policy, created in accordance with federal requirements. The inspections selected were categorized as severe or moderate deficiencies, allowing for a 30 day period starting after providing notification of inspection results which must occur within 5 days of the inspection completion (or effectively 35 days), the eighteen samples mentioned were completed after this window causing the PHA to be noncompliant with PHA policy 8-II.F and 24 CFR 982.406(e)(5). Additionally, one tenant failed inspection in October 2023 before failing a subsequent reinspection in December 2023. No further action was taken by the PHA, and the case was closed without resolving the deficiencies that caused the inspections to fail leading to noncompliance with 24 CFR 982.406(e)(5) and PHA policy 8-II.F. Cause The delayed reinspection’s and mistakenly closed inspection were due to constraints on resources and a change in the system utilized by the authority to administer the program during the year. Effect or potential effect The PHA did not perform necessary procedures to enforce owner and/or family obligations to correct deficiencies, which if unresolved, could lead to housing assistance payments to either party which should have been abated. Questioned costs None Context Sixty inspections requiring reinspection were selected for testing, eighteen were found to be completed after the required reinspection date. Late reinspection’s ranged from 1 day late to over a year late. One of the failed re-inspections cases was closed by management prior to resolution of identified deficiencies. None of the 60 samples selected were categorized as “life threatening”. Identification as a repeat finding if applicable 2023-008 Recommendation We recommend the Authority enhance internal controls over the timeliness and completeness of its the housing quality standard enforcement procedures. Views of responsible officials and planned corrective actions The HACLB acknowledges the importance of timely reinspections to ensure compliance with Housing Quality Standards (HQS) and has taken concrete steps to strengthen its internal controls and enforcement mechanisms. To strengthen compliance and reduce delays, HACLB implemented an enhanced reinspection scheduling process in December 2024, using its MRI housing software to automatically schedule reinspections within the 30-day remediation period. The system also tracks extension requests and approvals, while staff regularly monitor system-generated reports to ensure timely follow-up and adherence to HUD standards. These improvements are designed to ensure that repairs are verified within the required timeframe, increase program compliance, and improve the overall quality of housing for HCV participants. HACLB is committed to ongoing monitoring and refinement of this process to ensure continuous improvement.
Finding Number: 2024-006 Finding Title: Internal controls Over Compliance Participants Reexaminations, Housing Assistance Payments and Related Reporting Compliance Requirement(s): Special Tests – Housing Assistance Payment, Reporting, Allowed and Unallowed Costs Classification: Material Weakness Programs: Section 8 Housing Choice Vouchers ALN #: 14.871 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development (HUD) Federal Award Numbers: Multiple – City receives incremental funding throughout the year Federal Award Year: 2024 Criteria or specific requirement (including statutory, regulatory, or other citation Allowable Costs Principles ; Activities Allowed and Unallowed; Eligibility § 982.201 Eligibility and targeting. (3) The annual income (gross income) of an applicant family is used both for determination of income-eligibility under paragraph (b)(1) of this section and for targeting under paragraph (b)(2)(i) of this section. In determining annual income of an applicant family that includes a person with disabilities, the determination must include the disallowance of increase in annual income as provided in 24 CFR 5.617, if applicable. (4) The applicable income limit for issuance of a voucher when a family is selected for the program is the highest income limit (for the family size) for areas in the PHA jurisdiction. The applicable income limit for admission to the program is the income limit for the area where the family is initially assisted in the program. At admission, the family may only use the voucher to rent a unit in an area where the family is income eligible. Housing Assistance Payments (e) Effective date of reexamination. (1) The PHA must adopt policies consistent with this section prescribing how to determine the effective date of a change in the housing assistance payment resulting from an interim redetermination. (2) At the effective date of a regular or interim reexamination, the PHA must make appropriate adjustments in the housing assistance payment in accordance with § 982.505. (f) Accuracy of family income data. The PHA must establish procedures that are appropriate and necessary to assure that income data provided by applicant or participant families is complete and accurate. The PHA will not be considered out of compliance with the requirements in this section solely due to de minimis errors in calculating family income but is still obligated to correct errors once the PHA becomes aware of the errors. A de minimis error is an error where the PHA determination of family income deviates from the correct income determination by no more than $30 per month in monthly adjusted income ($360 in annual adjusted income). Reporting 24CFR982.516(d) Family reporting of change. The PHA must adopt policies consistent with this section prescribing when and under what conditions the family must report a change in family income or composition. HUD collects Tenant data to understand demographic, family profile, income, and housing information for participants in the Public Housing, Section 8 Housing Choice Voucher, Section 8 Project Based Certificate, Section 8 Moderate Rehabilitation, and Moving to Work Demonstration programs. This data also allows HUD to monitor the performance of programs and the performance of public housing agencies that administer the programs. 24 CFR Part 908 and 24 CFR section 982.158 The HUD-50058, Family Report (OMB No. 2577-0083) is required to be submitted by the PHA electronically to HUD each time the PHA completes an issuance, admission, annual reexamination, interim reexamination, portability move-in, expiration, or other change of unit for a family. The PHA must also submit the Family Report when a family ends participation in the program or moves out of the PHA’s jurisdiction under portability. 2 CFR 200 SUBPART D – POST FEDERAL AWARD REQUIREMENTS 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The Public Housing Authority (PHA) of the City of Long Beach did not have procedures implemented for a secondary review during the process of income tenant income reexamination. Insufficient internal controls around reexaminations of income could lead noncompliance with Eligibility, Reporting, Housing assistance payment, and expenditure allowability requirements. Cause The PHA did not have control procedures in place for a secondary review on income reexaminations but is in the process of implementing a control which was not in place for the fiscal year under audit due to understaffing. Effect or potential effect Insufficient controls over the reexamination process could lead to ineligible participants in the program, housing assistance payments that are either incorrect or to ineligible participants, and inaccurate reporting to HUD. Questioned costs None Context We tested 62 reexaminations, none of which included a secondary review. Identification as a repeat finding if applicable 2023-009 Recommendation We recommend the PHA establish a secondary review over the reexamination of income of program participants. Views of responsible officials and planned corrective actions While HUD does not mandate a secondary review of files or allocate additional funding for such activities, HACLB recognizes the critical importance of accurate participant data, timely housing assistance payments, and compliance with HUD reporting requirements. HACLB has established and continues to enhance a system of internal controls to ensure program integrity and compliance. HACLB leverages its MRI housing management software to automate data validation and error detection in alignment with HUD’s PIC requirements, ensuring accurate and compliant submissions. The system flags validation errors for correction before transmission, while additional oversight through the PIC Error Dashboard, SEMAP evaluations, and internal file reviews supports ongoing quality control. Errors identified through these processes are used for staff training and performance improvement, with new Housing Specialists’ work closely monitored to uphold accuracy and program integrity. With the utilization of MRI housing management software and PIC systems, enhanced quality control processes, ongoing staff training, and proactive monitoring, HACLB is confident in its ability to maintain strong internal controls, ensure compliance with HUD requirements, and safeguard program integrity.
Finding Number: 2024-006 Finding Title: Internal controls Over Compliance Participants Reexaminations, Housing Assistance Payments and Related Reporting Compliance Requirement(s): Special Tests – Housing Assistance Payment, Reporting, Allowed and Unallowed Costs Classification: Material Weakness Programs: Section 8 Housing Choice Vouchers ALN #: 14.871 Pass-through entity: N/A – Direct Award Federal Agency: Department of Housing and Urban Development (HUD) Federal Award Numbers: Multiple – City receives incremental funding throughout the year Federal Award Year: 2024 Criteria or specific requirement (including statutory, regulatory, or other citation Allowable Costs Principles ; Activities Allowed and Unallowed; Eligibility § 982.201 Eligibility and targeting. (3) The annual income (gross income) of an applicant family is used both for determination of income-eligibility under paragraph (b)(1) of this section and for targeting under paragraph (b)(2)(i) of this section. In determining annual income of an applicant family that includes a person with disabilities, the determination must include the disallowance of increase in annual income as provided in 24 CFR 5.617, if applicable. (4) The applicable income limit for issuance of a voucher when a family is selected for the program is the highest income limit (for the family size) for areas in the PHA jurisdiction. The applicable income limit for admission to the program is the income limit for the area where the family is initially assisted in the program. At admission, the family may only use the voucher to rent a unit in an area where the family is income eligible. Housing Assistance Payments (e) Effective date of reexamination. (1) The PHA must adopt policies consistent with this section prescribing how to determine the effective date of a change in the housing assistance payment resulting from an interim redetermination. (2) At the effective date of a regular or interim reexamination, the PHA must make appropriate adjustments in the housing assistance payment in accordance with § 982.505. (f) Accuracy of family income data. The PHA must establish procedures that are appropriate and necessary to assure that income data provided by applicant or participant families is complete and accurate. The PHA will not be considered out of compliance with the requirements in this section solely due to de minimis errors in calculating family income but is still obligated to correct errors once the PHA becomes aware of the errors. A de minimis error is an error where the PHA determination of family income deviates from the correct income determination by no more than $30 per month in monthly adjusted income ($360 in annual adjusted income). Reporting 24CFR982.516(d) Family reporting of change. The PHA must adopt policies consistent with this section prescribing when and under what conditions the family must report a change in family income or composition. HUD collects Tenant data to understand demographic, family profile, income, and housing information for participants in the Public Housing, Section 8 Housing Choice Voucher, Section 8 Project Based Certificate, Section 8 Moderate Rehabilitation, and Moving to Work Demonstration programs. This data also allows HUD to monitor the performance of programs and the performance of public housing agencies that administer the programs. 24 CFR Part 908 and 24 CFR section 982.158 The HUD-50058, Family Report (OMB No. 2577-0083) is required to be submitted by the PHA electronically to HUD each time the PHA completes an issuance, admission, annual reexamination, interim reexamination, portability move-in, expiration, or other change of unit for a family. The PHA must also submit the Family Report when a family ends participation in the program or moves out of the PHA’s jurisdiction under portability. 2 CFR 200 SUBPART D – POST FEDERAL AWARD REQUIREMENTS 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure eligibility criteria are met and documented. Condition The Public Housing Authority (PHA) of the City of Long Beach did not have procedures implemented for a secondary review during the process of income tenant income reexamination. Insufficient internal controls around reexaminations of income could lead noncompliance with Eligibility, Reporting, Housing assistance payment, and expenditure allowability requirements. Cause The PHA did not have control procedures in place for a secondary review on income reexaminations but is in the process of implementing a control which was not in place for the fiscal year under audit due to understaffing. Effect or potential effect Insufficient controls over the reexamination process could lead to ineligible participants in the program, housing assistance payments that are either incorrect or to ineligible participants, and inaccurate reporting to HUD. Questioned costs None Context We tested 62 reexaminations, none of which included a secondary review. Identification as a repeat finding if applicable 2023-009 Recommendation We recommend the PHA establish a secondary review over the reexamination of income of program participants. Views of responsible officials and planned corrective actions While HUD does not mandate a secondary review of files or allocate additional funding for such activities, HACLB recognizes the critical importance of accurate participant data, timely housing assistance payments, and compliance with HUD reporting requirements. HACLB has established and continues to enhance a system of internal controls to ensure program integrity and compliance. HACLB leverages its MRI housing management software to automate data validation and error detection in alignment with HUD’s PIC requirements, ensuring accurate and compliant submissions. The system flags validation errors for correction before transmission, while additional oversight through the PIC Error Dashboard, SEMAP evaluations, and internal file reviews supports ongoing quality control. Errors identified through these processes are used for staff training and performance improvement, with new Housing Specialists’ work closely monitored to uphold accuracy and program integrity. With the utilization of MRI housing management software and PIC systems, enhanced quality control processes, ongoing staff training, and proactive monitoring, HACLB is confident in its ability to maintain strong internal controls, ensure compliance with HUD requirements, and safeguard program integrity.
Earmarking Federal Agency: Department of Homeland Security Federal Program Name: Disaster Grant Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Grant Award Number: 4337DR-FL-2024 Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria: Compliance: 2 CFR 200.302(b)(3) states that records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Per 2 CFR section 200.303(a), a non-Federal entity must: 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 comply 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). Condition: Management costs requested and received from FEMA exceeded the 5% threshold. Questioned Costs: $35,572. Context: Received the total award amount for calculation of the 5% threshold. Compared to the management costs requested and received. Cause: The County requested management fees unaware of the total expenditure amount. Effect: Over request of management fees leads to unallowable costs. Repeat finding: No Recommendation: Provide clear, updated guidance and periodic training sessions on earmarking rules and how to apply them. Conduct reviews of earmarking compliance. View responsible official and planned corrective actions: New procedures will be implemented that strengthen internal controls to ensure clear earmarking guidance and initial review of compliances.
Federal Agency: Department of Homeland Security Federal Program Name: Disaster Grant Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Grant Award Number: 4337DR-FL-2024 Award Period: Various Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: Compliance: 2 CFR 200.302(b)(3) states that records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Per 2 CFR section 200.303(a), a non-Federal entity must: 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 comply 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). Condition: It was observed that quarterly progress reports lacked documentation of review and approval by management prior to submission to the granting agency. Questioned Costs: None. Context: All quarterly progress reports selected for testing lacked documented review and approval. Cause: The City has not established formal policies and procedures for the review and approval process. Effect: The lack of a proper review and approval process for grant quarterly progress report submissions can result in the submission of inaccurate and incomplete reimbursement requests and reports, which may lead to non-compliance with grant requirements and potential financial penalties. Repeat Finding: No Recommendation: We recommend that the organization implement a review and approval process for all quarterly progress report submissions. This should include: - Training staff on the importance of the review and approval process. - Ensuring adequate staffing levels to handle the review process. - Developing clear guidelines and procedures for the review and approval process. - Regularly monitoring and auditing the review process to ensure compliance. View of Responsible Official and Planned Corrective Actions: There is no disagreement with the audit finding. See Corrective Action Plan
Federal Agency: Department of Homeland Security Federal Program Name: Disaster Grant Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Grant Award Number: 4337DR-FL-2024 Award Period: Various Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: Compliance: 2 CFR 200.302(b)(3) states that records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Per 2 CFR section 200.303(a), a non-Federal entity must: 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 comply 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). Condition: It was observed that quarterly progress reports lacked documentation of review and approval by management prior to submission to the granting agency. Questioned Costs: None. Context: All quarterly progress reports selected for testing lacked documented review and approval. Cause: The City has not established formal policies and procedures for the review and approval process. Effect: The lack of a proper review and approval process for grant quarterly progress report submissions can result in the submission of inaccurate and incomplete reimbursement requests and reports, which may lead to non-compliance with grant requirements and potential financial penalties. Repeat Finding: No Recommendation: We recommend that the organization implement a review and approval process for all quarterly progress report submissions. This should include: - Training staff on the importance of the review and approval process. - Ensuring adequate staffing levels to handle the review process. - Developing clear guidelines and procedures for the review and approval process. - Regularly monitoring and auditing the review process to ensure compliance. View of Responsible Official and Planned Corrective Actions: There is no disagreement with the audit finding. See Corrective Action Plan
Item 2024-001 Activities Allowed/Allowable Cost Education Stabilization Fund (ESF) ALN# 84.425 U.S. Department of Education Passed through the State Department of Education Grant period – Years ended September 30, 2024 (84.425U) Criteria – Per 2 CFR 200.303, the non-federal entity must 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 follow 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 – Controls in place did not operate properly to ensure that expenses were approved for allowability prior to purchase. Cause – Officials relied on approved budget for ESSER to substantiate the purchase of supplies made with ESSER funds. Effect – Lack of controls for proper approval on disbursements could lead to disallowed costs. We noted that certain payments lacked approval, however, our audit disclosed no instances of unallowable costs. Questioned Costs – N/A. Recommendation – We recommend the strengthening of controls to ensure that all expenses are properly approved by adequate officials as noted in procedures. Management’s Response – The Board will strengthen the controls in place to ensure that all procedures have been followed prior to expenditures being encumbered.
Item 2024-002 Special Tests and Provisions – Wage Rate Requirements Education Stabilization Fund (ESF) ALN# 84.425 U.S. Department of Education Passed through the State Department of Education Grant period – Years ended September 30, 2024 (84.425U) Criteria – Grantees should have controls in place to ensure that contractors and subcontractors are notified of the requirement to pay prevailing wage rates to all laborers and mechanics employed on construction contracts in excess of $2,000 financed by federal assistance funds and to submit weekly certified payrolls for each week in which contract work is performed. 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR 200.326 and 29 CFR Part 5, Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction (DOL Regulations) require the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). Condition – Adequate controls were not in place to ensure that contractors and subcontractors were notified of the requirements to comply with the wage rate requirements and provided timely certified payrolls throughout the construction projects. Cause – A clause describing the Wage Rate Requirements was not added to the construction contracts. There was a lack of sufficient controls over the communication of this requirement to ensure the accuracy and completeness of the certified payrolls being provided to the Board. Effect – Lack of notification of the wage rate requirements to the contractors and subcontractors could lead to disallowed costs. We noted that payments to contractors did not have supporting documentation of certified payrolls. However, our audit disclosed no instances of unallowable costs. Questioned Costs – $166,152. Recommendation – We recommend the strengthening of controls to ensure the prevailing wage rate clauses are included in the contracts and that certified payrolls are received for each week in which construction work is performed. Management’s Response – The Board will strengthen the controls in place to provide assurance that proper prevailing wage rate clauses are added to construction contracts and certified payrolls are received from each week in which construction work is performed.
Criteria: 2 CFR 200.303 requires that internal control must provide reasonable assurance that the Organization complies with the requirements of the Uniform Guidance and its grant agreements. If not complied with, it could result in the disallowance of costs and repayment of funds to the granting agency. The standards mentioned above require that internal control be established and maintained to ensure compliance. Condition: The Organization's Congregate Meal program reports meals served using computerized software. This information is prepared using original documentation prepared at the point of service. During the fiscal year under audit, instances were identified of inconsistencies between the software reports and the original documentation of the meals served to participants. Cause: The Organization's procedures for preparing meal reports primarily relies on summary-level information and does not include more detailed reconciliations by individuals to the records prepared at the senior center. Effect or Potential Effect: The reported meal counts were materially in agreement with the underlying documentation, but the lack of more detailed review could cause reimbursement requests to be made for meals not actually served. Questioned Costs: None. Recommendation: We recommend the Organization increase the detail of the review process over the tracking of meals, including both the financial function and those with direct knowledge and supervision of the services being performed. We recommend the Organization consider additional training for program staff. Management's Response: Management agrees with the recommendation and has established and implemented written procedures to ensure future compliance.
U.S. Department of Health and Human Services - 93.432 Center for Independent Living 2024-004 Lack of Documented Approval Criteria: Per 2 CFR §200.303, the entity must establish and maintain effective internal controls over federal awards that provide reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the award. Adequate documentation of approvals is a fundamental internal control to ensure expenditures are necessary, allowable, and properly authorized. Condition: During our testing of expenditures charged to the Centers for Independent Living funded by the U.S. Department of Health and Human Services, we noted that the League did not maintain documented evidence of management approval prior to incurring or paying costs. The transactions reviewed lacked documented authorizations, supervisor sign-offs, or other documentation showing formal approval. Cause: The lack of documented approval appears to be due to inconsistent application of internal controls and the absence of a standardized process for documenting expenditure authorization for federal programs. Effect: Without documented approval, there is an increased risk that unallowable or unauthorized expenditures could be charged to the federal award. It also weakens the audit trail and compliance with Uniform Guidance requirements. Questioned Costs: None noted. Recommendation: We recommend the League implement and enforce a formal process requiring documented pre-approval of all expenditures charged to federal programs. This may include standardized approval forms or electronic workflows that clearly demonstrate appropriate review and authorization prior to payment. Views of Responsible Officials and Planned Corrective Actions: See corrective action plan on page 50.
Finding 2024-006 – CASH MANAGEMENT (repeat comment) Type: Significant Deficiency in Internal Control. Program: ALN 93.493 Congressional Directives Grant Name: Access to Behavioral Crisis Services Grantor Number: FG-22-099 Criteria: Pursuant to 2 CFR 200.303, recipients must, “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 CMHSP has established internal controls relating to approvals of cash requests. However, during testing, we noted that cash requests did not contain evidence of required review and approvals. Cause: This condition was caused by an insufficient internal control process for review and approval of cash requests. Effect: Cash requests submitted prior to review and approval are at risk of reporting incorrect information. Questioned Cost: None. Context: Although amounts listed in the cash requests were supported by the CMHSP’s internal records, the requests did not contain evidence of approvals. Recommendation: We recommend that the CMHSP review their internal controls and make necessary changes to ensure that cash requests are reviewed and approved prior to submission. Management’s Resp: We are in agreement with this finding.
Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Pass-through Agency: The Pennsylvania State University; New Jersey Department of Health Pass-through Number: S004968-COP-TFT; DFHS24SNA005 Award Period: October 1, 2023 - September 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria: 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F - Audit Requirements, section 200.303 requires that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. This includes verifying that vendors are not suspended or debarred before engaging in transactions. Condition: During our testing, we found that the Organization provided documentation showing that the vendors used in the federal program were not listed as suspended or debarred according to the Sam.gov website, in line with their internal control procedures. However, there was no documentation indicating that the verification was performed prior to entering the transactions. Questioned Costs: None Context: The absence of documentation confirming that vendors were screened for suspension or debarment before engaging in transactions represents a gap in internal control over compliance. This control measure is essential to adhere to Federal regulations and reduce the risk of conducting business with parties who are suspended or debarred. Cause: The Organization did not have a formal process in place to document the verification of suspension and debarment status prior to engaging with vendors. Effect: In the absence of documented evidence of vendor verification, there is an elevated risk that the Organization may engage in transactions with suspended or debarred parties. This situation could lead to noncompliance with Federal regulations and result in potential penalties. Repeat Finding: N/A – Not a repeat finding. Recommendation: The Organization should establish and enforce controls to verify that vendors are not suspended or debarred prior to entering any transactions and maintain this documentation. This measure ensures the integrity of the procurement process and mitigates risks associated with engaging disqualified vendors. In 2024, the threshold amount for suspension and debarment checks was $25,000. Transactions equal to or exceeding this amount required verification to confirm that the entity involved was not debarred or suspended. Viewed of Responsible Officials and Planned Corrective Actions: Please refer to The Food Trust’s Corrective Action Plan.
Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Pass-through Agency: The Pennsylvania State University; New Jersey Department of Health Pass-through Number: S004968-COP-TFT; DFHS24SNA005 Award Period: October 1, 2023 - September 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria: 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F - Audit Requirements, section 200.303 requires that non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. This includes verifying that vendors are not suspended or debarred before engaging in transactions. Condition: During our testing, we found that the Organization provided documentation showing that the vendors used in the federal program were not listed as suspended or debarred according to the Sam.gov website, in line with their internal control procedures. However, there was no documentation indicating that the verification was performed prior to entering the transactions. Questioned Costs: None Context: The absence of documentation confirming that vendors were screened for suspension or debarment before engaging in transactions represents a gap in internal control over compliance. This control measure is essential to adhere to Federal regulations and reduce the risk of conducting business with parties who are suspended or debarred. Cause: The Organization did not have a formal process in place to document the verification of suspension and debarment status prior to engaging with vendors. Effect: In the absence of documented evidence of vendor verification, there is an elevated risk that the Organization may engage in transactions with suspended or debarred parties. This situation could lead to noncompliance with Federal regulations and result in potential penalties. Repeat Finding: N/A – Not a repeat finding. Recommendation: The Organization should establish and enforce controls to verify that vendors are not suspended or debarred prior to entering any transactions and maintain this documentation. This measure ensures the integrity of the procurement process and mitigates risks associated with engaging disqualified vendors. In 2024, the threshold amount for suspension and debarment checks was $25,000. Transactions equal to or exceeding this amount required verification to confirm that the entity involved was not debarred or suspended. Viewed of Responsible Officials and Planned Corrective Actions: Please refer to The Food Trust’s Corrective Action Plan.
Internal Controls over Compliance with Activities Allowed or Unallowed Requirement (Significan Defiency. Identification of the Federal Program(s): 1. Assistance Listig program Title and Number 21.027 Appalachian Community Grant Program, 2. Federal award identification number: 21.027 Ohio Department of Development (GOA-F23-ACGDG-195968), 3. Name of the federal agencies: 21.027 Department of the Treasury, 4. Name of the applicable pass-throught entities: 21.027: Ohio Department of Development. Criteria or specific requirement (including statutory, regulatory, or other citation): The 2 CFR section 200.303 of the Uniform Guidance requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations and the terms and conditions of the fereral awards. Condition: During the Audit, it was noted 8 out of 8 non-payroll charges for the major program lacked invoice approvals, as approvals were not required for the actural transactions. Cause: Failure to adhere to their established porcess and no proper turnover of previous employees let to the absence of approvals for the actual transactions. Effect or potential effect: Without adequate internal controls to ensure that all charges to teh federal program are properly reviewed for allowablity, SAOP could be noncompliant with the allowability requirement and might request funds for unalloed costs. Questioned Costs: None. Context: There are no invoice approvals for non-payroll charges in the major program. Identificaion as a repeat findings, if applicable: Yes, see findings 2023-001. Recomendations: We recommend that SAOP secure approvals for charges related to the federal program. View of responsible officals: Management agrees with the findings and recommendation.
Program Information: U.S. Department of Housing and Urban Development Indian Housing Block Grant Assistance Listing #14.867 Award Numbers: 55-IH-53-18320 Award Period: 10/18/2011 – 09/30/2034 Criteria: Per the 2024 OMB Compliance Supplement, each recipient shall develop written policies governing the eligibility, admission, and occupancy of families for housing assisted with grant funds (25 USC 4133(d)). Per YNHA policies, all program applicants must meet the following eligibility requirements: • Qualify as an Indian Family or qualify for an exception - YNHA may decide to provide housing assistance for non-Indian family if they deem the presence of the family on the reservation is essential to the well-being of Indian families and the need for housing of essential families cannot reasonably be met without such assistance (ex. teachers, healthcare providers). Executive Director will make a determination for essential families. YNHA may also provide housing for law enforcement officers of the Nation or another unit of government and YNHA determines the presence of the officer may deter crime. • Have an annual income that meets income eligibility standards (considered low-income based on HUD thresholds) or qualify as an exception. Families that are not low-income can receive assistance in a few cases: they were low income at the time of initial occupancy, they received a Mutual Help unit through transfer of the unit from a family member, or the family is an essential family/law enforcement (see above). • Be 18 years or older or 16 with status as an emancipated minor. • Provide a complete application including proof of tribal enrollment, social security cards, and proof of income. • Signed Consent for Release of Information to YNHA/HUD Form 9886. • Must submit to drug and alcohol screening tests prior to signing the rental agreement, lease, or homeownership agreement. • Annual inspections. 2 CFR § 200.303 - Internal controls 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). Condition/Context: During testing of 30 tenant files under the IHBG program: • 2 of 30 files did not include a signed rental agreement documenting initial eligibility approval. • 30 of 30 files lacked evidence of approval of recertifications or required inspections. [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Cause: YNHA’s internal control procedures over eligibility and recertification were not consistently followed. Management did not ensure that signed agreements and approvals of recertifications/inspections were documented in the tenant files. Effect: Failure to document eligibility determinations and approvals creates a risk that ineligible tenants may receive housing benefits, that federal program requirements may not be met, and that YNHA may be subject to HUD compliance findings. Questioned Cost: N/A – The documentation deficiencies identified did not result in known unallowable costs or payments to ineligible participants; therefore, no questioned costs are reported. Prior Year Finding: No. Recommendation: We recommend that YNHA implement written procedures and staff training to ensure all required eligibility and occupancy documentation is obtained and retained. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Program Information: U.S. Department of Housing and Urban Development Indian Housing Block Grant Assistance Listing #14.867 Award Numbers: 55-IH-53-18320 Award Period: 10/18/2011 – 09/30/2034 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the suspension and debarment standards set out at 2 CFR Part 180, which implements Executive Orders 12549 and 12689, “Debarment and Suspension,” federal awarding agency regulations in Title 2 of the CFR adopting/implementing the OMB guidance in 2 CFR Part 180; program legislation; and the terms and conditions of the award. 2 CFR § 200.303 - Internal controls 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). Condition/Context: 2 of 4 samples selected for suspension and debarment testing did not have documentation of a suspension and debarment search performed prior to entering a transaction with the vendor. [ X ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: There were ineffective controls in place during the period, along with management oversight. Effect: YNHA may unknowingly enter into business with a suspended or debarred vendor. Questioned Cost: N/A – While documentation of the suspension and debarment verification was not available, no evidence was identified indicating that payments were made to suspended or debarred parties. Therefore, no questioned costs were identified. Prior Year Finding: No. Recommendation: We recommend YNHA conduct a training for staff and program managers to review YNHA’s suspension and debarment requirements and perform searches annually. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Program Information: U.S. Department of Housing and Urban Development Indian Housing Block Grant Assistance Listing #14.867 Award Numbers: 55-IH-53-18320 Award Period: 10/18/2011 – 09/30/2034 Criteria: Per the 2024 OMB Compliance Supplement: Program regulations provide that a tribe may assume responsibilities for environmental review and decision making under the requirements of 24 CFR Part 58 or it may allow HUD to retain these responsibilities. The tribe is the responsible entity, whether or not a TDHE is authorized to receive IHBG grant amounts on behalf of the tribe (24 CFR section 58.2(a)(7)(ii)). If HUD retains the responsibilities, HUD will do reviews under the provisions of 24 CFR Part 50 (24 CFR section 1000.20). A HUD environmental review must be completed for any activities not excluded before a recipient may acquire, rehabilitate, convert, lease, repair, or construct property, or commit HUD or local funds (24 CFR section 1000.20(a)). If the tribe assumes these responsibilities, the following applies: An environmental review must be prepared for each project or activity. Funds may not be committed to a grant activity or project before the completion of the environmental review and approval of the Request for Release of Funds (RROF) and environmental certification. If the responsible entity tribe determines that it met a criterion specified in the regulations that would qualify the project as exempt or qualify the project for certain categorical exclusions, the RROF and environmental certification requirements do not apply (24 CFR sections 58.34 and 58.35(b), 24 CFR section 1000.20(b)(3)). 2 CFR § 200.303 - Internal controls 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). Condition/Context: During testing, we noted that 1 of 3 environmental review samples had expenditures prior to approval of the environmental review. [ X ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: Lack of internal controls over environmental reviews. Effect: If funds are expended prior to completion of the environmental review, they may be in violation of environmental laws and out of compliance with the program. The funds may also be used for projects where the review determines there were significant or unavoidable environmental impacts, and it should not have started. Questioned Cost: N/A – Although expenditures were incurred prior to approval of the environmental review, the costs tested were ultimately allowable under the program, supported by adequate documentation, and not prohibited by regulation. Therefore, no costs required adjustment or repayment. Prior Year Finding: No. Recommendation: We recommend YNHA ensure environmental reviews are approved prior to beginning work on the project. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Condition: In accordance with 2 CFR-200.328 and 2 CFR-200.303, non-federal entities must submit performance and financial reports as required by the awarding agency and must establish and maintain effective internal control over compliance with federal statutes, regulations, and the terms and conditions of the federal award. Context: The City is required to submit monthly progress reports ten calendar days after the end of each month, quarterly progress reports no later than the 10th of quarter end, and a bi-annual Contract and Subcontract Activity form (HUD-2516), to be submitted by April 15 and October 15 each year. Per testing, monthly and quarterly reports were submitted 10 to 27 days after the deadline. ABPA was unable to obtain evidence that form HUD-2516 was submitted by either of the required due dates. Effect: Failure to submit required reports in a timely manner, and the lack of supporting documentation, represents a deficiency in internal control over compliance. This increases the risk of noncompliance with federal reporting requirements, which could result in questioned costs, delayed reimbursements, or jeopardize future funding. Cause: Delays in report submission were primarily due to insufficient internal controls over the reporting process, lack of clear assignment of responsibilities, and inadequate monitoring of reporting deadlines. Questioned costs: None. Recommendation: We recommend that the City strengthen its internal controls over compliance by implementing a centralized reporting calendar or system to monitor federal reporting deadlines. In addition, procedures should be established to ensure that documentation of timely report submission is retained in the grant files. Staff responsible for grant administration should also receive training on federal reporting requirements.
Department of Health and Human Services Temporary Assistance for Needy Families, 93.558, Affects awards FAST X for the year ending 12/31/2024 and Benefits Cliff for the year ending 12/31/2024 under assistance listing 93.558 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Goodwill-Easter Seals Minnesota’s internal control structure should be designed to properly follow the allocation policy for employees’ pay to each grant in accordance with the policy established by Goodwill-Easter Seals Minnesota. Condition: Goodwill-Easter Seals Minnesota has an internal control system designed to detect or prevent improper allocation of employees pay to grants in a timely manner in accordance with their established policy, however, during the year for two pay periods tested, it did not identify errors in the process. Cause: Goodwill-Easter Seals Minnesota has a process for allocating employee wages based on hours worked. The controls in place did not operate as designed and failed to detect errors in the allocation of employee pay to the grants. Effect: Employees had some of their pay allocated improperly and not in accordance with the policy established. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of seven pay periods out of 26 were selected for testing which accounted for $1,458,797 of $2,490,122 of federal program expenditures. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a more extensive review over payroll allocation to ensure pay is properly allocated to each grant in accordance with the policy established by Goodwill-Easter Seals Minnesota. Views of Responsible Officials: Management agrees with this finding.
Department of Health and Human Services Temporary Assistance for Needy Families, 93.558, Affects awards FAST X for the year ending 12/31/2024 and Benefits Cliff for the year ending 12/31/2024 under assistance listing 93.558 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Goodwill-Easter Seals Minnesota’s internal control structure should be designed to properly follow the allocation policy for employees’ pay to each grant in accordance with the policy established by Goodwill-Easter Seals Minnesota. Condition: Goodwill-Easter Seals Minnesota has an internal control system designed to detect or prevent improper allocation of employees pay to grants in a timely manner in accordance with their established policy, however, during the year for two pay periods tested, it did not identify errors in the process. Cause: Goodwill-Easter Seals Minnesota has a process for allocating employee wages based on hours worked. The controls in place did not operate as designed and failed to detect errors in the allocation of employee pay to the grants. Effect: Employees had some of their pay allocated improperly and not in accordance with the policy established. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of seven pay periods out of 26 were selected for testing which accounted for $1,458,797 of $2,490,122 of federal program expenditures. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a more extensive review over payroll allocation to ensure pay is properly allocated to each grant in accordance with the policy established by Goodwill-Easter Seals Minnesota. Views of Responsible Officials: Management agrees with this finding.
Department of Health and Human Services Temporary Assistance for Needy Families, 93.558, Affects awards FAST X for the year ending 12/31/2024 and Benefits Cliff for the year ending 12/31/2024 under assistance listing 93.558 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Goodwill-Easter Seals Minnesota’s internal control structure should be designed to properly follow the allocation policy for employees’ pay to each grant in accordance with the policy established by Goodwill-Easter Seals Minnesota. Condition: Goodwill-Easter Seals Minnesota has an internal control system designed to detect or prevent improper allocation of employees pay to grants in a timely manner in accordance with their established policy, however, during the year for two pay periods tested, it did not identify errors in the process. Cause: Goodwill-Easter Seals Minnesota has a process for allocating employee wages based on hours worked. The controls in place did not operate as designed and failed to detect errors in the allocation of employee pay to the grants. Effect: Employees had some of their pay allocated improperly and not in accordance with the policy established. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of seven pay periods out of 26 were selected for testing which accounted for $1,458,797 of $2,490,122 of federal program expenditures. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a more extensive review over payroll allocation to ensure pay is properly allocated to each grant in accordance with the policy established by Goodwill-Easter Seals Minnesota. Views of Responsible Officials: Management agrees with this finding.
Department of Health and Human Services Temporary Assistance for Needy Families, 93.558, Affects awards FAST X for the year ending 12/31/2024 and Benefits Cliff for the year ending 12/31/2024 under assistance listing 93.558 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Goodwill-Easter Seals Minnesota’s internal control structure should be designed to properly follow the allocation policy for employees’ pay to each grant in accordance with the policy established by Goodwill-Easter Seals Minnesota. Condition: Goodwill-Easter Seals Minnesota has an internal control system designed to detect or prevent improper allocation of employees pay to grants in a timely manner in accordance with their established policy, however, during the year for two pay periods tested, it did not identify errors in the process. Cause: Goodwill-Easter Seals Minnesota has a process for allocating employee wages based on hours worked. The controls in place did not operate as designed and failed to detect errors in the allocation of employee pay to the grants. Effect: Employees had some of their pay allocated improperly and not in accordance with the policy established. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of seven pay periods out of 26 were selected for testing which accounted for $1,458,797 of $2,490,122 of federal program expenditures. Repeat Finding from Prior Year: No Recommendation: We recommend that management develop a more extensive review over payroll allocation to ensure pay is properly allocated to each grant in accordance with the policy established by Goodwill-Easter Seals Minnesota. Views of Responsible Officials: Management agrees with this finding.
Informaon on the Federal Program: Assistance Lisng Number 10.565—Commodity Supplemental Food Program, U.S. Department of Agriculture Pass‐Through Enes and Award Numbers: Minnesota Department of Health, award number 204642. Compliance Requirement: Eligibility Type of Finding: Significant deficiency in internal control over compliance Criteria: 2 CFR 200.303 of Subpart D, "Post Federal Award Requirements Standards for Financial and Program Management," of the Uniform Guidance requires a nonfederal enty to establish and maintain effecve internal control over the federal award that provides reasonable assurance that the enty is managing the federal award in compliance with federal statutes, regulaons, and the terms and condions of the federal award, including Eligibility. Condion: We requested eligibility forms for forty‐four parcipants to review for the signature of site partner personnel indicang review of eligibility informaon on the form. Three of the forty‐four forms were unable to be located upon request. Eligibility informaon is input in ClientTrack soware and the form should also be uploaded. Cause: Signed enrollment forms were not properly scanned into Sharepoint and had likely been disposed of. The signatures on these forms indicated the review of an agency partner indicang the informaon included on the form is correct. Effect or Potenal Effect: An ineligible individual could receive a CSFP box. Quesoned Costs: None Context: Signed enrollment forms were not available for three of forty‐four parcipants selected. Repeat Finding: yes, 2023‐002 Recommendaon: We recommend that Second Harvest Heartland digitalize their CSFP enrollment forms for convenient access and provide review of the electronically filed form prior to disposal of the paper form. Views of Responsible Officials: Agree.
Finding 2024-001 – Material weakness over amounts reported on the Schedule of Expenditures of Federal Awards (SEFA) Identification of the federal program: Federal Granting Agency: U.S. Department of Homeland Security, Federal Emergency Management Agency (FEMA) Award Name: COVID-19 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Pass-through entity: Vermont Department of Public Safety and New York State Division of Homeland Security and Emergency Services Criteria or specific requirement: 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Condition: The preliminary fiscal year 2024 expenditures reported on the schedule of expenditures of federal awards (SEFA) for the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program (Disaster Grants program) incorrectly excluded Disaster Grants program funding that was obligated by FEMA during fiscal year 2024. Cause: Management did not have effective internal controls in place to ensure accurate reporting of the obligated funds for the Disaster Grants program. Effect or potential effect: Certain obligated amounts were incorrectly reported in the preliminary SEFA for the year ended September 30, 2024. Questioned costs: None. The updated SEFA, as presented in this report, was adjusted for the item noted in the Context section below. Context: Certain obligated amounts were incorrectly reported in the preliminary SEFA for the year ended September 30, 2024. After commencement of the Uniform Guidance audit procedures, adjustments of $18,199,589 were made to correctly report the SEFA amounts related to the Disaster Grants program. Identification as a repeat finding, if applicable: No. Recommendation: Management should reassess its internal controls over the review and approval process of the SEFA preparation. Views of responsible officials: Management has updated internal controls for the review and approval of the SEFA. Outlier projects (unique grant projects that aren’t recorded in the grant recording system) are reviewed for Uniform Guidance reporting based on program-specific guidance. Once complete, another member of management reviews the SEFA and general ledger details for accuracy. When questions arise, discussion will occur to ensure accuracy in the amounts reported on the SEFA.
Finding 2024-001 – Material weakness over amounts reported on the Schedule of Expenditures of Federal Awards (SEFA) Identification of the federal program: Federal Granting Agency: U.S. Department of Homeland Security, Federal Emergency Management Agency (FEMA) Award Name: COVID-19 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Pass-through entity: Vermont Department of Public Safety and New York State Division of Homeland Security and Emergency Services Criteria or specific requirement: 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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).” Condition: The preliminary fiscal year 2024 expenditures reported on the schedule of expenditures of federal awards (SEFA) for the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program (Disaster Grants program) incorrectly excluded Disaster Grants program funding that was obligated by FEMA during fiscal year 2024. Cause: Management did not have effective internal controls in place to ensure accurate reporting of the obligated funds for the Disaster Grants program. Effect or potential effect: Certain obligated amounts were incorrectly reported in the preliminary SEFA for the year ended September 30, 2024. Questioned costs: None. The updated SEFA, as presented in this report, was adjusted for the item noted in the Context section below. Context: Certain obligated amounts were incorrectly reported in the preliminary SEFA for the year ended September 30, 2024. After commencement of the Uniform Guidance audit procedures, adjustments of $18,199,589 were made to correctly report the SEFA amounts related to the Disaster Grants program. Identification as a repeat finding, if applicable: No. Recommendation: Management should reassess its internal controls over the review and approval process of the SEFA preparation. Views of responsible officials: Management has updated internal controls for the review and approval of the SEFA. Outlier projects (unique grant projects that aren’t recorded in the grant recording system) are reviewed for Uniform Guidance reporting based on program-specific guidance. Once complete, another member of management reviews the SEFA and general ledger details for accuracy. When questions arise, discussion will occur to ensure accuracy in the amounts reported on the SEFA.
Criteria: According to 2 CFR 200.303, a non-federal entity must maintain effective internal control that provides reasonable assurance that the non-federal entity complies with Federal statutes, regulations, and the conditions of the Federal award. In the context of payroll expenditures, internal control should ensure that costs charged to the Federal program are allowable, in particular that they are allocable to the program (i.e. based on actual hours worked). Condition: For employees charging less than 100% of their payroll to the federal program, timesheets were used to identify time spent on program and nonprogram activities. During our testing of these payroll transactions, we noted 9 instances where the portion of an employee’s pay reimbursed by the program was different than the portion of hours supported by the timesheet. Cause: The District’s process for calculating these split payroll costs, and subsequently requesting reimbursement, did not include detailed review of all supporting calculations. Thus, the accuracy of certain requested payroll amounts relied on the personnel creating the reimbursement request. Effect or Potential Effect: While the noted errors did not result in charging unallowable costs, undetected future errors could cause funds to be drawn for payroll beyond the amount related to the program. Recommendation: We recommend that the District strengthen its controls over reimbursement requests by increasing the scope and detail of review prior to submission to the granting agency. Secondary review should be performed by another individual who did not prepare the original request when practicable.Contact Person Responsible For Corrective Action: Greg Ballentine, Executive Director Anticipated Completion Date: September 30, 2025 Management’s Response: Management acknowledges receipt of the audit report concerning our internal controls related to the review of reimbursement request worksheets. We appreciate the insight provided in identifying areas for improvement. While multiple levels of internal review were conducted during the creation of the base worksheet, we recognize the addition of columns could inadvertently introduce minor calculation errors and minor, inadvertent employee input errors could occur. To address this, we have implemented a procedure requiring that all worksheets undergo a review by an individual who did not prepare the original reimbursement request.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 001 – Factors Affecting Allowability of Costs Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 2 CFR Part 200.403 sets forth the requirements for costs to be allowable. This section specifically states that costs should “not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period.” 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: Brevard Health Alliance requested reimbursement for $8,978 of expenditures under two different federal grants. One grant is requested based upon clinic hours and another based on an individual’s time and effort. Cause: The cause of the situation was due to poorly designed internal control procedures related to the allocation of payroll expense requested for reimbursement between various grants. Effect: If the same expenditure is requested multiple times from the granting agency, they may request funds be returned. Questioned Cost: $8,978 of known questioned costs. However, the Alliance has additional allowable payroll costs to cover the amounts duplicated. Perspective: Total payroll that was requested for reimbursement was $5,251,473, with known questioned cost being $8,978 resulting in only 0.2% of payroll expenditures. Recommendation: The client should verify that reimbursement request do not include payroll expenditures submitted for other grants. The allocation of payroll should be done monthly. Management Response: Brevard Health Alliance will ensure allocation of payroll expenditures submitted for grants is done monthly to ensure stronger internal controls regarding grant funds.
2024 – 002 – Special Test and Provisions Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 42 CFR sections 51c.303 (f) requires that Brevard Health Alliance “have prepared a schedule of fees or payments for the provision of its services designed to cover its reasonable costs of operation and a corresponding schedule of discounts adjusted on the basis of the patient's ability to pay.” The schedule of discounts must provide for a full discount to individuals and families with annual incomes at or below those set forth in the poverty guidelines updated periodically in the Federal Register by the U.S. Department of Health and Human Services under the authority of 42 U.S.C 9902(2); and for no discount to individuals and families with annual incomes greater than twice those set forth in such guidelines. 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: CRI selected a sample of 25 patients to ensure the sliding fee schedule was properly applied. 1 of the 25 patients had the incorrect fee scale applied. Cause: The cause appears to be human error by an employee selecting the incorrect sliding fee scale. Identifying every manual input error is difficult, however, the Alliance performs an audit of the sliding fee schedule for thousands of patients on an annual basis. Effect: Patients could be paying more or less than what is allowable based on the fee schedule. Questioned Cost: Undeterminable as the grant is not reimbursed based on patient fees. Perspective: The issue appears isolated as it was a 4% failure rate (1 out of 25). Recommendation: Procedures should be implemented to verify the sliding fee schedule applied to new patients.
2024 – 002 – Special Test and Provisions Health Center Program & Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.224 & 93.527 Federal Award ID Number: H8004213 H8F41284 C1650401 H8G47667 H8L51683 H2E45573 Department of Health and Human Services Funding 2024 Criteria: 42 CFR sections 51c.303 (f) requires that Brevard Health Alliance “have prepared a schedule of fees or payments for the provision of its services designed to cover its reasonable costs of operation and a corresponding schedule of discounts adjusted on the basis of the patient's ability to pay.” The schedule of discounts must provide for a full discount to individuals and families with annual incomes at or below those set forth in the poverty guidelines updated periodically in the Federal Register by the U.S. Department of Health and Human Services under the authority of 42 U.S.C 9902(2); and for no discount to individuals and families with annual incomes greater than twice those set forth in such guidelines. 2 CFR 200.303 provides that non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with Uniform Guidance. Condition: CRI selected a sample of 25 patients to ensure the sliding fee schedule was properly applied. 1 of the 25 patients had the incorrect fee scale applied. Cause: The cause appears to be human error by an employee selecting the incorrect sliding fee scale. Identifying every manual input error is difficult, however, the Alliance performs an audit of the sliding fee schedule for thousands of patients on an annual basis. Effect: Patients could be paying more or less than what is allowable based on the fee schedule. Questioned Cost: Undeterminable as the grant is not reimbursed based on patient fees. Perspective: The issue appears isolated as it was a 4% failure rate (1 out of 25). Recommendation: Procedures should be implemented to verify the sliding fee schedule applied to new patients.