Housing Authority of the Town of Morristown

Federal Program Titles: Section 8 Housing Choice Vouchers Program Federal Assistance Listing Numbers: 14.871 Noncompliance – N. Special Tests and Provisions– Housing Quality Standards Inspections Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance for Special Tests and Provisions– Housing Quality Standards Inspections Criteria: The Authority must inspect the unit leased to a family annually to determine if the unit meets Housing Quality Standards (HQS) and the Authority must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). Condition: Based upon inspection of the Authority’s files and on discussion with management, there were documents that were unavailable for examination at the time of audit. Context: There are approximately 318 units. Of a sample size of fourteen (14) tenant files, two (2) files did not contain annual inspection reports per HQS compliance requirements. Our sample size is statistically valid. Known Questioned Costs: $33,504. Cause: There is a material weakness in internal controls over the compliance for HQS inspections. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that assures the program is in compliance. Effect: The Section 8 Housing Choice Vouchers Program is in material non-compliance with the Special Tests and Provisions - HQS Inspections type of compliance related to the program. Recommendation: We recommend the Authority design and implement internal control procedures that will assure compliance with the Uniform Guidance and the compliance supplement. Authority Response: The Authority accepts the recommendation of the auditor, and will implement internal control procedures that will ensure compliance with the Uniform Guidance.

Views of responsible officials and planned corrective action: The Authority accepts the recommendation of the auditor, and will implement internal control procedures that will ensure compliance with the Uniform Guidance. Allison Durham, Executive Director, is responsible for implementing this corrective action by September 30, 2024.

Finding 2021-001 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Housing Choice Vouchers Program Federal Catalog Numbers: 14.871 Noncompliance ? N. Special Tests and Provisions ? Housing Quality Standards Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions Criteria: Housing Quality Standards Inspections. The PHA must inspect the unit leased to a family at least annually to determine if the unit meets the Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). For units that fail inspection the PHA must correct all life threatening HQS deficiencies within 24 hours and all other deficiencies within 30 days. Condition: Based upon inspection of the Authority?s files and on discussions with management, the Authority did not properly abate three (3) out of four (4) annual failed inspections selected for testing. Context: The Authority did not properly abate three (3) out of four (4) failed inspections selected for testing. As a result, the Authority was not in compliance with Housing Quality Standards (HQS) as required by 24 CFR sections 982.158(d) and 982.405(b). Cause: There is a significant deficiency in internal controls over compliance for the special tests and provisions type of compliance related to HQS inspections. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that assures the program is in compliance. Effect: The Section 8 Housing Choice Vouchers Program is in non-compliance with the special tests and provisions type of compliance related to HQS inspections. Recommendation: We recommend the Authority design and implement internal control procedures that will assure compliance with the Uniform Guidance and the compliance supplement. Authority Response: We agree with the Auditor?s observations on the re-inspection of the failed units.

Corrective Action Plan For the year ended September 30, 2021 U.S. Department of Housing and Urban Development: The Housing Authority of the Town of Morristown respectfully submits the following corrective action plan for the year ended September 30, 2021. Auditor: Novogradac and Company, LLP Certified Public Accountants 1433 Hooper Avenue Suite 329 Toms River, New Jersey 08753 The findings from the September 30, 2021, schedule of findings and responses are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. Financial Statement Findings There were no findings relating to the financial statements which are required to be reported in accordance with Government Auditing Standards. Federal Award Findings Reference 2021-001: Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Housing Choice Vouchers Program Federal Catalog Numbers: 14.871 Noncompliance ? N. Special Tests and Provisions ? Housing Quality Standards Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions Criteria: Housing Quality Standards Inspections. The PHA must inspect the unit leased to a family at least annually to determine if the unit meets the Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). For units that fail inspection the PHA must correct all life threatening HQS deficiencies within 24 hours and all other deficiencies within 30 days. Condition: Based upon inspection of the Authority?s files and on discussions with management, the Authority did not properly abate three (3) out of four (4) annual failed inspections selected for testing. Context: The Authority did not properly abate three (3) out of four (4) failed inspections selected for testing. As a result, the Authority was not in compliance with Housing Quality Standards (HQS) as required by 24 CFR sections 982.158(d) and 982.405(b). Cause: There is a significant deficiency in internal controls over compliance for the special tests and provisions type of compliance related to HQS inspections. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that assures the program is in compliance. Effect: The Section 8 Housing Choice Vouchers Program is in non-compliance with the special tests and provisions type of compliance related to HQS inspections. Recommendation: We recommend the Authority design and implement internal control procedures that will assure compliance with the Uniform Guidance and the compliance supplement. Views of responsible officials and planned corrective action: The Authority agrees with the recommendation of the auditor on the re-inspection of the failed units. Allison Durham, Deputy Director, is responsible to remedy the deficiency by September 30, 2022.

Federal Program Titles: Public and Indian Housing Program Federal Catalog Numbers: 14.850 Material Noncompliance ? N. Special Tests and Provisions ? Public Housing Waiting List Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions Criteria: The PHA must establish and adopt written policies for admission of tenants. The PHA's tenant selection policies must include requirements for applications and waiting lists, description of the policies for selection of applicants from the waiting lists, and policies for verification and documentation of information relevant to acceptance or rejections of an applicant (24 CFR sections 960.202 through 960.206). ?Selection? from the waiting list generally occurs when the PHA notifies a family whose name reaches the top of the waiting list to come in to verify eligibility for admission. Condition: Based on discussions with management, it could not be determined with any certainty that new move-ins were selected from the wait list in an order that is in accordance with the Authority?s policy. The Authority was unable to provide the necessary wait lists during the time of audit. Context: One (1) name was selected from the new move-in list and that name was to be traced to the waiting list to verify new move-in was chosen in an order that was in accordance with the Authority?s policy. It was determined that the one (1) new move-in selected could not be traced back to the Authority's waiting list due to the Authority having no waiting list on file for the period being audited. Known Questioned Costs: $3,253 Cause: There is a significant deficiency in internal controls over compliance for the special tests and provisions type of compliance. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that assures the program is in compliance. Effect: The Public and Indian Housing Program is in non-compliance with the special tests and provisions type of compliance related to selections from the waiting list. Recommendation: We recommend the Authority design and implement internal control procedures that will assure compliance with the Uniform Guidance and the compliance supplement. Views of responsible officials and planned corrective action: The Authority has begun the design and implementation of internal control procedures to assure compliance with the HUD requirements regarding tenant files. We have made improvements in our wait list documentation. Subsequent to FY19, each month, staff saves a copy of the wait list that documents where each applicant falls on the waiting list. As an apartment becomes available, the waiting list may need to be filtered by a priority, changing the ranking of applicants on the waiting list. Therefore, when a unit is to be leased up, a screen shot is taken of the pertinent area of the waiting list that the applicant was pulled from showing their ranking at the time of the possible lease-up. This process went into effect after FY19.

Corrective Action Plan For the year ended September 30, 2020 U.S. Department of Housing and Urban Development: The Housing Authority of the Town of Morristown respectfully submits the following corrective action plan for the year ended September 30, 2020. Auditor: Novogradac and Company, LLP Certified Public Accountants 1433 Hooper Avenue Suite 329 Toms River, New Jersey 08753 The findings from the September 30, 2020 schedule of findings and responses are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. Financial Statement Findings There were no findings relating to the financial statements which are required to be reported in accordance with Government Auditing Standards. Federal Award Findings Reference 2020-001: Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public and Indian Housing Program Federal Catalog Numbers: 14.850 Material Noncompliance ? N. Special Tests and Provisions ? Public Housing Waiting List Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions Criteria: The PHA must establish and adopt written policies for admission of tenants. The PHA's tenant selection policies must include requirements for applications and waiting lists, description of the policies for selection of applicants from the waiting lists, and policies for verification and documentation of information relevant to acceptance or rejections of an applicant (24 CFR sections 960.202 through 960.206). ?Selection? from the waiting list generally occurs when the PHA notifies a family whose name reaches the top of the waiting list to come in to verify eligibility for admission. Condition: Based on discussions with management, it could not be determined with any certainty that new move-ins were selected from the wait list in an order that is in accordance with the Authority?s policy. The Authority was unable to provide the necessary wait lists during the time of audit. Context: One (1) name was selected from the new move-in list and that name was to be traced to the waiting list to verify new move-in was chosen in an order that was in accordance with the Authority?s policy. It was determined that one (1) new move-in selected could not be traced back to the Authority's waiting list due to the Authority having no waiting list on file for the period being audited. Known Questioned Costs: $3,253 Cause: There is a significant deficiency in internal controls over compliance for the special tests and provision type of compliance. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that assures the program is in compliance. Effect: The Public and Indian Housing Program is in non-compliance with the special tests and provisions type of compliance related to selections from the waiting list. Recommendation: We recommend the Authority design and implement internal control procedures that will assure compliance with the Uniform Guidance and the compliance supplement. Views of responsible officials and planned corrective action: The Authority has begun the design and implementation of internal control procedures to assure compliance with the HUD requirements regarding tenant files. We have made improvements in our wait list documentation. Subsequent to FY19, each month, staff saves a copy of the wait list that documents where each applicant falls on the waiting list. As an apartment becomes available, the waiting list may need to be filtered by a priority, changing the ranking of applicants on the waiting list. Therefore, when a unit is to be leased up, a screen shot is taken of the pertinent area of the waiting list that the applicant was pulled from showing their ranking at the time of the possible lease-up. This process went into effect after FY19. Anna Rivera is responsible to implement this corrective action by September 30, 2022.

2019-006

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Housing Choice Vouchers Program Federal Catalog Numbers: 14.871 Material Noncompliance ? E. Eligibility ? Tenant Files Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance for Eligibility Criteria: Tenant Files (Section 8 Housing Choice Vouchers Program) - The PHA must do the following: As a condition of admission or continued occupancy, require the tenant and other family member to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 982.516). These files are required to be maintained and available for examination at the time of audit. Condition: Based upon inspection of the Authority?s files and on discussion with management there were a significant number of documents that were unavailable for examination at the time of audit. Context: There are approximately 160 units. Of a sample size of 11 tenant files, the following was noted: ? The original application was missing in 6 files ? The lead based paint form was missing in 1 file ? The signed lease was missing in 6 files ? Rent reasonableness documentation was missing in 11 files ? The annual inspection form was missing in 9 files ? Verification of income was missing in 1 file Our sample size is statistically valid. Known Questioned Costs: $119,201. Cause: There is a material weakness in internal controls over the compliance for the eligibility type of compliance related to the maintenance of tenant files. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that assures the program is in compliance. Effect: The Section 8 Housing Choice Vouchers Program is in material non-compliance with the eligibility type of compliance related to the maintenance of tenant files. The non-compliance is also material to the financial statements. Recommendation: We recommend the Authority design and implement internal control procedures that will assure compliance with the Uniform Guidance and the compliance supplement. Views of responsible officials and planned corrective action: The Authority has begun the design and implementation of internal control procedures to assure compliance with the HUD requirements regarding tenant files. Although we have made improvements in our tenant file documentation, we recognize that more needs to be done and will establish an internal audit review procedure to our processes. We have hired a consultant to work with staff to ensure tenant file compliance. We have additionally hired a firm to do the annual inspections of units. We are in the process of hiring a firm to do the rent reasonableness for the units. Currently, we review each file for full program compliance and all tenants with unsigned leases where resident still resides in the unit with the unsigned lease will be required to sign the lease.

Views of responsible officials and planned corrective action: The Authority has begun the design and implementation of internal control procedures to assure compliance with the HUD requirements regarding tenant files. Although we have made improvements in our tenant file documentation, we recognize that more needs to be done and will establish an internal audit review procedure to our processes. We have hired a consultant to work with staff to ensure tenant file compliance. We have additionally hired a firm to do the annual inspections of units. We are in the process of hiring a firm to do the rent reasonableness for the units. Currently, we review each file for full program compliance and all tenants with unsigned leases where resident still resides in the unit with the unsigned lease will be required to sign the lease. Diana Smith is responsible to implement this corrective action by September 30, 2020.

2018-003

Finding 2019-004: Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Housing Choice Vouchers Program Federal Catalog Numbers: 14.871 Noncompliance ? N. Special Tests and Provisions ? Reasonable Rent Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions Criteria: The PHA must determine that the rent to owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a five percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: Based upon inspection of the Authority's files and discussions with management, the Authority did not determine that the rent to owner is reasonable. Context: PHAs must ensure that rents charged by owners to the HCV program participants are reasonable. The PHA must compare the rent for the voucher unit to rents for similar unassisted units in the marketplace. There were no rates obtained and reviewed during 2019. In addition, it was noted during review of the Authority's files that there were no rents determined to be reasonable in previous audit periods as well. Cause: There is a significant deficiency in internal controls over the compliance for the special tests and provisions type of compliance related to reasonable rent. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that assures the program is in compliance. Effect: The Section 8 Housing Choice Vouchers Program is in non-compliance with the special tests and provisions type of compliance related to reasonable rent. Recommendation: We recommend the Authority design and implement internal control procedures that will assure compliance with the Uniform Guidance and the compliance supplement. Views of responsible officials and planned corrective action: The Authority has begun the design and implementation of internal control procedures to assure compliance with the HUD requirements regarding determining reasonable rent. We are in the process of hiring a firm to do the rent reasonableness for the units. A consultant that we have hired will help incorporate the gathering and assessment of reasonable rent into the Section 8 process. The consultant has already assisted us in putting in a temporary system to perform rent reasonableness analysis. That process will remain until the hiring of a firm, to perform rent reasonableness analysis, commences.

Views of responsible officials and planned corrective action: The Authority has begun the design and implementation of internal control procedures to assure compliance with the HUD requirements regarding determining reasonable rent. We are in the process of hiring a firm to do the rent reasonableness for the units. A consultant that we have hired will help incorporate the gathering and assessment of reasonable rent into the Section 8 process. The consultant has already assisted us in putting in a temporary system to perform rent reasonableness analysis. That process will remain until the hiring of a firm, to perform rent reasonableness analysis, commences. Diana Smith is responsible to implement this corrective action by September 30, 2020.

Finding 2019-005: Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public and Indian Housing Program Federal Catalog Numbers: 14.850 Noncompliance ? E. Eligibility ? Tenant Files Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance for Eligibility Material Weakness in Internal Control over Financial Reporting Criteria: Tenant Files. The PHA must do the following: As a condition of admission or continued occupancy, require the tenant and other family member to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 982.516). Condition: Based upon inspection of the Authority?s files and on discussion with management there were a number of documents that were unavailable for examination at the time of audit. Context: There are approximately 445 units. Of a sample size of 17 tenant files, the following was noted: ? Original application was missing in 2 files ? HUD - 9887 Consent to Release Information Form was missing in 2 files ? Lead based paint form was missing in 1 file ? Verification of income was missing in 4 files ? Verification of assets was missing in 4 files. Our sample size is statistically valid. Known Questioned Costs: $16,800 Cause: There is a material weakness in internal controls over the compliance for the eligibility type of compliance related to the maintenance of tenant files. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance. Effect: The Public and Indian Housing Program is in non-compliance with the eligibility type of compliance related to the maintenance of tenant files. Recommendation: We recommend the Authority design and implement internal control procedures that will assure compliance with the Uniform Guidance and the Compliance Supplement. Views of responsible officials and planned corrective action: The Authority has begun the design and implementation of internal control procedures to assure compliance with the HUD requirements regarding tenant files. Although we have made improvements in our tenant file documentation, we recognize that more needs to be done and will establish an internal audit review procedure to our processes. Three of the four tenant files that were missing the verification of income and assets were a result of anniversary date errors that were made in the prior year that were identified in FY19 by then current staff and corrected. However, the correction of the anniversary date put the date of the annual recertification outside of the audit period, resulting in no recertifications during the audit period for the selected sampled tenant. We believe that in FY19 and FY20, we have corrected all of the anniversary dates and therefore, subsequently there will be an annual recertification with verification of income and assets for each resident each year. One sample selection for each of the noted findings was for the same resident. In FY16, under previous Authority administration, the Authority?s Board approved a resolution to have this resident live at the Authority's senior site and act as a 24-hour superintendent. As a result, this resident is not annually certified. The current Authority administration is working with HUD to determine an action plan to fulfill the need to have a 24-hour superintendent at the senior developments, how the unit occupied by this individual should be handled, and address the particular resident.

Views of responsible officials and planned corrective action: The Authority has begun the design and implementation of internal control procedures to assure compliance with the HUD requirements regarding tenant files. Although we have made improvements in our tenant file documentation, we recognize that more needs to be done and will establish an internal audit review procedure to our processes. Three of the four tenant files that were missing the verification of income and assets were a result of anniversary date errors that were made in the prior year that were identified in FY19 by then current staff and corrected. However, the correction of the anniversary date put the date of the annual recertification outside of the audit period, resulting in no recertifications during the audit period for the selected sampled tenant. We believe that in FY19 and FY20, we have corrected all of the anniversary dates and therefore, subsequently there will be an annual recertification with verification of income and assets for each resident each year. One sample selection for each of the noted findings was for the same resident. In FY16, under previous Authority administration, the Authority?s Board approved a resolution to have this resident live at the Authority's senior site and act as a 24-hour superintendent. As a result, this resident is not annually certified. The current Authority administration is working with HUD to determine an action plan to fulfill the need to have a 24-hour superintendent at the senior developments, how the unit occupied by this individual should be handled, and address the particular resident. Diana Smith is responsible to implement this corrective action by September 30, 2020.

2018-008

Reference 2019-006: Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Public and Indian Housing Program Federal Catalog Numbers: 14.850 Material Noncompliance ? N. Special Tests and Provisions ? Public Housing Waiting List Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions Criteria: The PHA must establish and adopt written policies for admission of tenants. The PHA's tenant selection policies must include requirements for applications and waiting lists, description of the policies for selection of applicants from the waiting lists, and policies for verification and documentation of information relevant to acceptance or rejections of an applicant (24 CFR sections 960.202 through 960.206). ?Selection? from the waiting list generally occurs when the PHA notifies a family whose name reaches the top of the waiting list to come in to verify eligibility for admission. Condition: Based on discussions with management, it could not be determined with any certainty that new move-ins were selected from the wait list in an order that is in accordance with the Authority?s policy. The Authority was unable to provide the necessary wait lists during the time of audit. Context: Three (3) names were selected from the new move-in list and those names were to be traced to the waiting list to verify new move-ins were chosen in an order that was in accordance with the Authority?s policy. It was determined that three (3) out of three (3) new move-ins selected could not be traced back to the Authority's waiting list due to the Authority having no waiting list on file for the period being audited. Known Questioned Costs: $10,080 Cause: There is a significant deficiency in internal controls over compliance for the special tests and provision type of compliance. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that assures the program is in compliance. Effect: The Public and Indian Housing Program is in non-compliance with the special tests and provisions type of compliance related to selections from the waiting list. Recommendation: We recommend the Authority design and implement internal control procedures that will assure compliance with the Uniform Guidance and the compliance supplement. Views of responsible officials and planned corrective action: The Authority has begun the design and implementation of internal control procedures to assure compliance with the HUD requirements regarding tenant files. We have made improvements in our wait list documentation. Subsequent to FY19, each month, staff saves a copy of the wait list that documents where each applicant falls on the waiting list. As an apartment becomes available, the waiting list may need to be filtered by a priority, changing the ranking of applicants on the waiting list. Therefore, when a unit is to be leased up, a screen shot is taken of the pertinent area of the waiting list that the applicant was pulled from showing their ranking at the time of the possible lease-up. This process went into effect after FY19.

Views of responsible officials and planned corrective action: The Authority has begun the design and implementation of internal control procedures to assure compliance with the HUD requirements regarding tenant files. We have made improvements in our wait list documentation. Subsequent to FY19, each month, staff saves a copy of the wait list that documents where each applicant falls on the waiting list. As an apartment becomes available, the waiting list may need to be filtered by a priority, changing the ranking of applicants on the waiting list. Therefore, when a unit is to be leased up, a screen shot is taken of the pertinent area of the waiting list that the applicant was pulled from showing their ranking at the time of the possible lease-up. This process went into effect after FY19. Diana Smith is responsible to implement this corrective action by September 30, 2020.

2018-009

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2017-002

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2017-001

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2016-001

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2016-002

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