Finding 45722 (2022-004)

Material Weakness
Requirement
EN
Questioned Costs
$1
Year
2022
Accepted
2023-03-20
Audit: 40270
Organization: City of Albemarle (NC)

AI Summary

  • Core Issue: The Public Housing Department failed to properly document eligibility for 75% of applicants reviewed, risking benefits for ineligible participants.
  • Impacted Requirements: Non-compliance with 2 CFR 200 and 24 CFR regulations regarding documentation and tenant admission policies.
  • Recommended Follow-Up: Management must improve internal controls and ensure all eligibility documentation is complete and maintained for each applicant.

Finding Text

U.S. Department of Housing & Urban Development Program Name: Public and Indian Housing AL Number: 14.850 Material Non-Compliance Material Weakness, Eligibility Special Tests and Provisions Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that applicants have all required documentation in their file. In accordance with 24 CFR sections 960.202 through 960.208, the City must establish, adopt, and follow policies for admission of tenants as it relates to the Public Housing waiting list. In accordance with 24 CFR Part 5 Subpart F, the City must maintain documentation to support tenant eligibility. Condition: The Public Housing Department did not follow procedures to ensure the proper eligibility determination were made and documented. Context: Of the 319 applicants during the current year valued at $768,137, we examined 60 (valued at $220,760) and determined that 45 (75% valued at $165,570) applicants were not supported with case documentation to confirm eligibility. We also determined that three applicants (5% valued at $11,038) had inconsistent documentation supporting eligibility determination in the case file. There were four applicants (7% valued at $14,718) missing documentation to support that the tenants were selected from the public housing waiting list. Upon further review, these seven applicants were deemed eligible. Effect: Participants could receive benefits for which they are not eligible. Cause: Weakness in implementation of controls over eligibility procedures. Due to the turnover in the housing department, the City failed to obtain or retain the completed eligibility documentation. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. The sample results identified $165,570 in known questioned costs. Recommendation: Management should adhere to the program?s policy and maintain proper eligibility documentation in the applicant?s file. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

Corrective Action Plan

Name of Contact Person: Dr. Kim Scott, Director of Public Housing Corrective Action/Management?s Response: The issues regarding applicant files was one of the first control issues identified when I came to the City. A written action plan has been developed with the approval of our local Housing and Urban Development field office. Each applicant is being reviewed at their anniversary date to obtain complete records of documentation to support eligibility. Proposed Completion Date: Immediately and ongoing.

Categories

Questioned Costs Special Tests & Provisions Eligibility HUD Housing Programs Material Weakness Internal Control / Segregation of Duties

Other Findings in this Audit

  • 45721 2022-003
    Material Weakness
  • 622163 2022-003
    Material Weakness
  • 622164 2022-004
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $1.03M
14.850 Public and Indian Housing $768,137
14.872 Public Housing Capital Fund - Nc19po75501-21 $479,890
14.872 Public Housing Capital Fund - Nc19po75501-20 $473,693
66.458 Clean Water State Revolving Fund (sanitary Sewer Rehibilitation, Phase 3) $202,520
66.458 Clean Water State Revolving Fund (inflow & Infiltration) $150,342
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $42,706
14.871 Covid-19 - Section 8 Housing Choice Vouchers $25,423
21.019 Covid-19 - Coronavirus Relief Fund $19,703