Finding Text
Finding 2022-002 N. Special Tests and Provisions ? N14. Recording of Declarations of Trust/Declaration of Restrictive Covenants Against Public Housing Property Identification of the Federal Program: U.S. Department of Housing and Urban Development (HUD) Assistance Listing No. 14.881 ? Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2022 through December 31, 2022 Program No.: IL002-001-00022D Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): The Uniform Guidance 2 CFR section 200.303 states, ?The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).? 2 CFR section 905.505(c)(4) states, ?Declaration of Trust. All public housing rental projects must show evidence satisfactory to HUD of an effective Declaration of Trust being recorded in first position, meeting the requirements of paragraph (c) of this section and covering the term of the financing. If part of a mixed-finance project, this evidence will be with the mixed-finance evidentiary documents.? Condition: Seventeen Declarations of Trust (DOTs) were selected for testing of internal controls over and compliance with the recording of DOTs against public housing property. For nine of the 17 DOTs tested, we noted control deviations and a compliance exception of the following nature: ? We identified four instances in which incorrect DOT Property Identification Numbers (PINs) were recorded in the Authority?s DOT Excel monitoring spreadsheet when comparing the DOT filed with the State of Illinois to the Authority?s DOT Excel monitoring spreadsheet (control deviations). ? We identified six instances in which incorrect DOT addresses were recorded in the Authority?s DOT Excel monitoring spreadsheet when comparing the DOT filed with the State of Illinois to the Authority?s DOT Excel monitoring spreadsheet (control deviations). ? We identified one instance in which incorrect PINs were recorded within the Authority?s DOT Excel monitoring spreadsheet. In addition, the incorrect PINs were recorded on the DOT filed with the State of Illinois. As such, a Scrivener?s Affidavit is required to be recorded by the Authority (control deviations and compliance exception). Cause: The Authority?s DOT Excel schedule used to monitor the accuracy and completeness of DOTs contained inaccuracies which were due to human error. Effect or Potential Effect: DOTs may not be properly recorded for public housing. Questioned Costs: None. Context: The Public Housing program had 148 DOTs recorded against public housing property for the year ended December 31, 2022. Identification as a Repeat Finding, if Applicable: The finding is a repeat of finding 2021-002 from the prior year. Recommendation: The Authority should perform a periodic quality control review of its DOT Excel monitoring spreadsheet against recorded DOTs to ensure continued accuracy and completeness. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.