PHC 811, Inc.Non-Profit

2021-001 CFDA 14.181 Supportive Housing for Persons with Disabilities (Repeat Finding 2020-001) Criteria: The Uniform Guidance requires that for covered transactions the non-Federal entity verify that entities are not suspended, debarred, or otherwise excluded. Condition: During our audit, we inquired with management regarding their procurement policy noting that the procurement policy was implemented September 1, 2020. The terms of the policy state that preferred vendors are to be reviewed quarterly to ensure none are suspended or debarred. While the policy was implemented in September 2020, there was no documentation of review of the suspension or debarment until April 2021. Cause: This area was considered low risk by the Organization in the prior year as the priority and attention shifted to COVID rental assistance programs and resident safety during the fiscal year. Only one new vendor was added during the year as the result of an acquisition, and as such, was considered low risk. The current vendor relationships were long term and in good standing resulting in a low risk assessment. As a result, vendors were not reviewed for suspension and debarment until the fourth quarter. Effect: Deviation from the policy in place could result in payments to suspended or debarred entities. Recommendation: The Organization should review the policy to determine if it is appropriate for the entity and amend the policy or adhere to the policy as documented. Questioned Costs: None Response: Management has reviewed the current policy and determined that quarterly review of vendors was too frequent given the low risk of vendors for noncompliance. Most vendors are either utilities, large MRO suppliers, or established long-term vendors. A modification to the policy has been drafted to change the quarterly review to no less than annually.

Criteria: Non-federal entities 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. The Uniform Guidance also requires that for covered transactions the non-Federal entity verify that entities are not suspended, debarred, or otherwise excluded. Condition: During our audit we inquired with management regarding their procurement policy and identified that PHC 811, Inc. did not have an approved, documented procurement policy in place as of July 1, 2017, which was the required date. A draft policy has been created to expand on their previous capital purchases policy and include procedures over suspension and debarment in accordance with 2 CFR part 200. Context: The procurement policy provides guidance and requirements that must be followed for all procurements, but specifically any procurements related to federal awards. Ensuring that the Organization?s vendors are not suspended or debarred should be part of the expense approval process, not just something done for new vendors. Aldrich tested a selection of expenses to determine if any of the selected vendors were suspended or debarred. None were identified in this testing. Cause: Management was not aware of the requirement to have a written policy in place for procurement or the requirement to verify that vendors were not suspended or debarred as of the July 1, 2017 implementation date. Effect: The Organization has been following their internal policies regarding procurement which are in line with the Uniform Guidance and we did not identify any instances of noncompliance related to actual purchases or suspension and debarment. This is a significant deficiency in controls over compliance and compliance related to procurement, suspension, and debarment. Recommendation: We recommend that the Organization implement the draft procurement policy immediately in order to be in compliance with the Uniform Grant Guidance. The Organization should also implement controls over compliance related to suspension and debarment. Questioned Costs: Unknown Response: Management has developed a procurement policy that follows the standards outlined in 2 CRF part 200. The policy was implemented and effective September 1, 2020.

Criteria: According to 24 CFR sections 92.209(i), 92.251(f), and 92.504(d), on-site inspections must be performed every 2 years for projects containing 5-25 units. Condition: The property was due for an inspection from the City of Portland on March 17, 2020, however, the inspection has been delayed due to the global coronavirus pandemic shut downs. At the time of the audit, the City had not rescheduled their inspection. Context: The inspections required would ensure that the properties are being maintained in accordance with the grant agreements and all other tenant occupancy restrictions. Cause: The coronavirus pandemic began surging in the United States in early March which cause communities, business, and governments to close down in-person operations and services. As a result, the on-site inspection has been delayed due to these restrictions and the Organization has not received a rescheduled inspection date. Effect: Any items in need of repair or not in compliance with the standards would be required to be repaired as a result of the inspection. This is considered to be a deficiency in controls over compliance. Recommendation: We recommend that the Organization contact the City of Portland to reschedule the inspection as soon as possible. Questioned Costs: Unknown Response: Due to COVID-19 public health emergency, the Portland Housing Bureau cancelled the HOME inspection that was scheduled for 2020 noting that there will be communication to reschedule in the coming months. As of September 2020, Portland Housing Bureau has temporarily suspended person-to-person customer service. Management will contact the Portland Housing Bureau regarding rescheduling an inspection.

2019-001 CFDA 14.181 Supportive Housing for Persons with Disabilities (Section 811) Criteria: Non-federal entities 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 statues and the procurement requirements identified in 2 CFR part 200. The Uniform Guidance also requires that for covered transactions the non-Federal entity verify that entities are not suspended, debarred, or otherwise excluded. Condition: During our audit we inquired with management regarding their procurement policy and identified that PHC 811, Inc. did not have an approved, documented procurement policy in place as of July 1, 2017, which was the required date. They have a capital purchases policy in place, but it does not cover all of the required criteria in 2 CFR part 200. They also do not have a policy in place to ensure that their vendors are not suspended or debarred. Context: The procurement policy provides guidance and requirements that must be followed for all procurements, but specifically any procurements related to federal awards. Ensuring that the Organization?s vendors are not suspended or debarred should be part of the expense approval process, not just something done for new vendors. Aldrich tested a selection of expenses to determine if any of the selected vendors were suspended or debarred. None were identified in this testing. Cause: Management was not aware of the requirement to have a written policy in place for procurement or the requirement to verify that vendors were not suspended or debarred. . Effect: The Organization has been following their internal policies regarding procurement which are in line with the Uniform Guidance and we did not identify any instances of noncompliance related to actual purchases or suspension and debarment. This is a compliance finding related to procurement, suspension, and debarment. Recommendation: We recommend that the Organization develop, adopt and implement a procurement policy immediately in order to be in compliance with the Uniform Grant Guidance. The Organization should also implement controls over compliance related to suspension and debarment. Questioned Costs: None Response: HUD has performed numerous audits with the last one being September 2018. We received 100% on that audit with no comments which included a review of the procurement policy. Management interpreted that as being the policy currently in place was acceptable. The Organization will document an all-inclusive Procurement Policy that reflects HUD and UGG requirements regarding procurement. The Procurement Policy will include the internal control required to cover suspension and debarment. The Organization will educate all employees of the Procurement Policy including suspension and debarment criteria and monitor adherence to the policy.

2019-002 CFDA 14.181 Supportive Housing for Persons with Disabilities (Section 811) Criteria: According to the Regulatory Agreement section 7f security deposits must be maintained in a separate FDIC, interest-bearing account. All interest earned shall be allocated to the tenants in proportion to their deposits and paid upon move out or utilized against outstanding debt for rent or damages. According to chapter 25 of the HUD Multifamily Asset Management and Project Servicing handbook (4350.1) the residual receipts of all projects with HUD-insured mortgages should be invested with interest accruing from the investments credited to the Residual Receipt account. According to the compliance supplement for this program issued by OMB the replacement reserve funds must be deposited in federally insured interest bearing accounts and all earnings must be added to the reserve. Condition: Based on our audit procedures tenant deposits and reserve funds were not held in interest bearing bank accounts. Context: Management understood this to be an optional practice not something that was mandated by the various compliance guidance. The lost interests on the reserve funds is lost to the Organization but the lost income on the tenant deposits is lost income to the tenants. Cause: Management did not understand this to be a required compliance item. Effect: There is lost earning to the tenants on their deposits which is dependent on how long the funds have been held by the Organization. Recommendation: We recommend that the Organization review the appropriate documentation and their regulatory agreement to determine the appropriate action necessary in order to be in compliance. We also recommend that management contact HUD to determine if any additional steps need to be taken regarding past amounts. Questioned Costs: Unknown Response: HUD has performed numerous audits with the last one being September 2018. The Organization received 100% on that audit with no comments. Included was a review of the MOR Desk Review where Item #17 on the Desk Review regarding interest on security deposit accounts clearly says in the comments: ?Not in interest bearing accounts?. Management interpreted that as being acceptable. The Organization will open new interest-bearing accounts and will transfer any existing monies in PHC 811, Inc. related security and reserve accounts to the new interest-bearing accounts. The Organization will track the security deposit account interest by resident and will distribute the interest to the residents account on a monthly basis according to HUD regulations.

GSA_MIGRATION

GSA_MIGRATION