HOUSING AUTHORITY OF THE CITY OF WOONSOCKETLocal Government

2021-002 ? PROCUREMENT AND SUSPENSION AND DEBARMENT Material Weakness/Material Noncompliance U.S. Department of Housing and Urban Development CFDA #: 14.850 ? Public and Indian Housing CRITERIA For any amounts above the petty cash ceiling, but not exceeding $150,000, the Authority may use small purchase procedures. Under small purchase procedures, the Authority shall obtain a reasonable number of quotes (preferably three); however, for purchases of less than $3,000, only one quote is required. The Authority must maintain records sufficient to detail the significant history of each procurement action. (Housing Authority of the City of Woonsocket Procurement Policy) CONDITION During fiscal year 2020, the Authority did not follow its procurement policy for a not-toexceed contract for security services. The contract, which was originally capped at $75,000, was not competitively re- procured upon reaching the cap, as required by the Authority?s policy. Payments made to this contractor were excluded from monthly monitoring reports, causing the need for re- procurement to go unnoticed by responsible personnel. Payments to this vendor continued in fiscal year 2021. For this particular contract, the role of the Procurement Officer was bypassed and another employee, not normally involved with purchasing, conducted the original procurement. As a result, required documentation was not obtained and other protocols were not followed. CAUSE The Authority?s policies and procedures were bypassed by management overrides of internal controls that were in place to prevent fraud and abuse. EFFECT The Authority has not ensured that it is receiving the most competitive prices or rates for services that have been procured, which may have resulted in unnecessary additional costs to the Authority.QUESTIONED COSTS We have identified known questioned costs for purchases that were not competitively procured and directly charged to the Public and Indian Housing Program of $249,157, representing the aggregate expenditures to the vendor identified during the audit period. CONTEXT We selected a sample of four contracts from a population of approximately 40 procurements. Total expenditures tested was $488,372. This was not a statistically valid sample. REPEAT FINDING Repeat of finding 2020-002. RECOMMENDATION We recommend that the Authority continue with the implementation of corrective actions initiated in response to prior year findings.

2021-003 ? ALLOWABLE COSTS/COST PRINCIPLES Material Weakness/Material Noncompliance U.S. Department of Housing and Urban Development CFDA #: 14.850 ? Public and Indian Housing CRITERIA Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this Part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (2 CFR 200.403). Contracts shall not exceed a period of five years, including options for renewal or extension. Contracts, other than energy performance contracts, with terms, plus extensions, that exceed a total of five years are viewed as restrictive of competition and in violation of 24 CFR 85.36(c) CONDITION The Authority approved an employment contract for a term longer than that allowed by law. The contract remained in effect during fiscal year 2021. Payroll controls were bypassed to increase salaries for certain employees above what was approved by the board and required by union contract. CAUSE The Authority?s policies and procedures were bypassed by management overrides of internal controls that were in place to prevent fraud and abuse.EFFECT As a result of bypassing internal controls, the Authority has entered into contracts that are not in compliance with laws and regulations and has incurred costs paid by Federal programs that could be disallowed by HUD. QUESTIONED COSTS None identified. CONTEXT We analyzed compensation adjustments for the entire population of employees. REPEAT FINDING Repeat of finding 2020-003. RECOMMENDATION We recommend that the Authority continue with the implementation of corrective actions initiated in response to prior year findings.

2020-002 ? PROCUREMENT AND SUSPENSION AND DEBARMENT Material Noncompliance/Material Weakness U.S. Department of Housing and Urban Development CFDA #: 14.850 ? Public and Indian Housing Program CRITERIA For any amounts above the petty cash ceiling, but not exceeding $150,000, the Authority may use small purchase procedures. Under small purchase procedures, the Authority shall obtain a reasonable number of quotes (preferably three); however, for purchases of less than $3,000, only one quote is required. The Authority must maintain records sufficient to detail the significant history of each procurement action. (Housing Authority of the City of Woonsocket Procurement Policy) CONDITION The Authority did not follow its procurement policy for a not-to-exceed contract for security services. The contract, which was originally capped at $75,000, was not competitively reprocured upon reaching the cap, as required by the Authority?s policy. Payments made to this contractor were excluded from monthly monitoring reports, causing the need for reprocurement to go unnoticed by responsible personnel. For this particular contract, the role of the Procurement Officer was bypassed and another employee, not normally involved with purchasing, conducted the original procurement. As a result, required documentation was not obtained and other protocols were not followed. CAUSE The Authority?s policies and procedures were bypassed by management overrides of internal controls that were in place to prevent fraud and abuse. EFFECT The Authority has not ensured that it is receiving the most competitive prices or rates for services that have been procured, which may have resulted in unnecessary additional costs to the Authority.SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) 2020-002 ? PROCUREMENT AND SUSPENSION AND DEBARMENT (CONTINUED) QUESTIONED COSTS We have identified known questioned costs for purchases that were not competitively procured and directly charged to the Public and Indian Housing Program of $435,296, representing the aggregate expenditures to the vendor identified. CONTEXT We selected a sample of two contracts from a population of 10 new procurements in fiscal year 2020. Total expenditures tested was $559,996. This was not a statistically valid sample. REPEAT FINDING This is a repeat of finding 2019-001 from the prior year. RECOMMENDATION We recommend that the Board of Commissioners take appropriate action to discourage overrides of internal controls and eliminate opportunities to bypass controls where possible. AUDITEE?S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.

2020-003 ? ALLOWABLE COSTS/COST PRINCIPLES Material Noncompliance/Material Weakness U.S. Department of Housing and Urban Development CFDA #: 14.850 ? Public and Indian Housing Program CRITERIA Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this Part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (2 CFR 200.403). Contracts shall not exceed a period of five years, including options for renewal or extension. Contracts, other than energy performance contracts, with terms, plus extensions, that exceed a total of five years are viewed as restrictive of competition and in violation of 24 CFR 85.36(c) CONDITION The Authority approved an employment contract for a term longer than that allowed by law. Payroll controls were bypassed to increase salaries for certain employees above what was approved by the board and required by union contract. CAUSE The Authority?s policies and procedures were bypassed by management overrides of internal controls that were in place to prevent fraud and abuse.EFFECT As a result of bypassing internal controls, the Authority has entered into contracts that are not in compliance with laws and regulations and has incurred costs paid by Federal programs that could be disallowed by HUD. QUESTIONED COSTS None identified. CONTEXT We analyzed compensation adjustments for the entire population of employees. REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend that the Board of Commissioners take appropriate action to discourage overrides of internal controls and eliminate opportunities to bypass controls where possible. AUDITEE?S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.

III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 2019-001 - Procurement, Suspension, and Debarment U.S. Department of Housing and Urban Development CFDA #: 14.850 ? Public and Indian Housing Program CRITERIA For any amounts above the petty cash ceiling, but not exceeding $150,000, the Authority may use small purchase procedures. Under small purchase procedures, the Authority shall obtain a reasonable number of quotes (preferably three); however, for purchases of less than $3,000, only one quote is required. The Authority must maintain records sufficient to detail the significant history of each procurement action. (Housing Authority of the City of Woonsocket Procurement Policy) CONDITION As part of our audit, we examined a sample of goods and services purchased during fiscal year 2019. As a result of our procedures, we noted one instance in which the Authority did not follow its policy for purchases exceeding $3,000. This vendor represented aggregate procurements of $168,299. CAUSE The Authority?s internal control over procurement was not effective at identifying the need for competitive procurement in instances where frequently recurring transactions resulted in aggregate purchases in excess of competitive procurement thresholds. EFFECT The Authority has not ensured that it is receiving the most competitive prices or rates for services that have been procured, which may have resulted in unnecessary additional costs to the Authority. QUESTIONED COSTS We have identified known questioned costs for purchases which were not competitively procured and directly charged to the Public and Indian Housing Program of $168,299, representing the aggregate expenditures to the vendor identified. CONTEXTWe selected a sample of four vendors from a population of twenty-six. Total expenditures tested was $422,627. This was not a statistically valid sample. REPEAT FINDING This is a repeat of finding 2018-001 from the prior year. RECOMMENDATION We recommend that the Authority make the following improvements to internal controls over procurement: ? Periodically review expenditures for frequently recurring transactions with vendors that could exceed the competitive procurement thresholds. ? Periodically compare the contract register against frequently used vendors. AUDITEE?S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.

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