Cincinnati Metropolitan Housing AuthorityLocal Government

CFDA Number, Federal Agency, and Program Name: 14.871, U.S. Department of Housing and Urban Development Housing Voucher Cluster Section 8 Housing Choice Vouchers Federal Award Identification Number and Year: N/A Pass through Entity: N/A Finding Type: Significant deficiency Repeat Finding: No Criteria: The Authority is required to reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification (24 CFR section 982.516(a) (1)). Condition: During the recertification process for one tenant, the Authority incorrectly input the tenant's income into their subsidy calculation software. This resulted in an overpayment of housing assistance payments to be received. Questioned Costs: $1,596 Identification of How Questioned Costs Were Computed: Overpayment of subsidy for the period under audit due to a lack of controls to ensure verified income was properly input into the subsidy calculation software. Context: For 1 of 40 tenants selected for eligibility testing, the Authority erroneously input prior year income information into the tenant's subsidy calculation for the HUD 50058 Form. This resulted in an overpayment of subsidy during the fiscal year ended June 30, 2021 totaling $1,596. Cause and Effect: Controls surrounding the input of tenant income into the subsidy calculation during the annual recertification of eligibility were not consistently followed. This resulted in an error in the calculation of the housing assistance payments, and an overpayment of subsidy during the fiscal year ended June 30, 2021 totaling $1,596. Recommendation: The Authority should strengthen controls to ensure tenant income is input into subsidy calculation software correctly during the annual recertification process to ensure assistance payments are correctly calculated in accordance with applicable federal regulations. Views of Responsible Officials and Corrective Action Plan: The Authority acknowledges the incorrect calculation of housing assistance payments that resulted in the overpayment of subsidy and has entered into repayment agreements with these individuals to make the Housing Choice Voucher Program whole. The Authority has implemented the following corrective action plan to eliminate these types of errors moving forward: (1) Housing Specialists will receive additional Eligibility and Rent Calculation Training in fall 2022. (2) Compliance department will increase random audits of completed certifications with focus on rent calculation (3) Increase training on SOPs in housing specialist meetings. (4) Develop tracking system for errors resulting from compliance audits. This will not only dictate areas where training is needed but also repeat offenders where disciplinary action may be warranted.

CFDA Number, Federal Agency, and Program Name: 14.871, U.S. Department of Housing and Urban Development - COVID 19 - Housing Voucher Cluster Section 8 Housing Choice Vouchers; 14.850, U.S. Department of Housing and Urban Development - COVID 19 - Public and Indian Housing Low income Public Housing Federal Award Identification Number and Year: N/A Pass through Entity: N/A Finding Type: Material weakness and material noncompliance with laws and regulations Repeat Finding: No Criteria: Section 8 Housing Choice Vouchers PIH Notices 2020 08 and 2020 18 CARES Act ? HCV Program Administrative Fees First and Second Award, respectively, cover requirements related to the supplemental administrative fee funding. This supplemental administrative fee funding may be used only for two purposes: (1) any currently eligible HCV administrative costs during the period that the program remains impacted by COVID 19; and (2) new COVID 19 related activities, including activities to support or maintain the health and safety of assisted individuals and families, and costs related to the retention and support of participating owners. Public and Indian Housing PIH Notice 2020 07 implements the requirements related to the supplemental appropriation of Operating Funds for PHAs. These funds may be used for eligible activities under the Operating Fund during the period the program is impacted by coronavirus, and other expenses related to preventing, preparing for, and responding to coronavirus. Furthermore, PIH Notice 2020 24 clarifies the requirements surrounding use of additional fee revenue charged by the Central Office Cost Center (COCC) to both programs. It allows the COCC to charge additional fee revenue (i.e. management, asset management, and bookkeeping fees), so long as it does not exceed 50 percent of existing safe harbors. The additional funds transferred to the COCC must be for immediate use (i.e. any additional fees above the safe harbor amounts transferred must be attached to a specific COCC expense and immediately used). CARES Act Funds transferred to the COCC (1) must be used for COCC COVID 19 related costs, or (2) to cover incremental higher operational costs of the COCC due to COVID 19, or (3) must show that the COCC fees charged to the program are less than what was expected due to COVID 19 pandemic. The Authority is required to track and account for these additional COCC funds separately. This means that an Authority?s COCC records must show the amount, when these additional funds were transferred to the COCC, the actual expenses that the additional COCC funds were used to cover, and the date paid. In addition, Authority will need to document the fee type, the amount the fee was increased, and how the total fee amount for that month was calculated. Condition: In reviewing activity surrounding the CARES Act funding received in relation to the supplemental administrative fee funding for Housing Choice Vouchers (HCV) and supplemental operating funds for Public and Indian Housing (PIH), as well as additional fee revenue charged by the Authority's COCC, we identified the following issues: An accrual for expenditures totaling $259,786 recognized by the Authority in the prior year was not reversed leading the Authority to overstate expenditures for the PIH program. The Authority's COCC erroneously duplicated expenditures eligible for reimbursement through fee revenue charged to both programs in the amount of $478,006. This led an overstatement of fee revenue on COCC and the corresponding fee expense charged to both programs. An invoice in the amount of $2,850 was improperly duplicated resulting in the Authority overstating revenues and expenditures associated with the supplemental CARES Act funds in that amount Invoices for eligible technological upgrades in response to COVID were not properly allocated across COCC, HCV, and PIH. Allocations were recognized on PIH and HCV; however, the full amount of the invoice was then duplicated in full on COCC. The total amount of this duplication of charges was $100,811. The Authority failed to properly identify and eliminate all CARES activity between COCC and the PIH and HCV programs during consolidation, resulting in an overstatement of fee revenue and expense on a consolidated basis. Questioned Costs: $340,703 Identification of How Questioned Costs Were Computed: Numerous audit entries were made in order to correct errors identified in relation to SEFA and financial statement reporting. The Authority was able to identify certain additional invoices that met the allowability criteria on their COCC to replace ineligible invoices and allocation errors identified. However, the Authority ultimately transferred $340,703 in HCV CARES Act funding to its COCC before incurring appropriate eligible expenditures in a subsequent period. Context: Overstatement of expenditures were identified in attempting to reconcile the Authority's tracking spreadsheets back to the reported general ledger balances. Additional issues surrounding improper allocations were identified during allowability testing over HCV, PIH, and COCC costs. Samples consisted of 40, 8, and 8 invoices, respectively, of which 15 of the invoices tested were improperly allocated or duplicated. In totality, an overstatement of $841,453 in expenditures were identified prior to adjustments. Subsequent to audit entries, the Authority reported expenditures related to supplemental HCV administrative fee funding and supplemental operating funding for PIH of $1,140,743 and $913,863, respectively. Cause and Effect: The Authority lacked the appropriate controls surrounding the tracking of CARES Act funding received under the PIH and HCV programs and associated expenditures. This resulted expenditures for the PIH and HCV programs being overstated by $349,299 and $492,154, respectively, prior to audit adjustments. In addition, the Authority transferred $340,703 in HCV CARES Act funding to its COCC before incurring appropriate eligible expenditures in a subsequent period. Recommendation: The Authority should strengthen controls surrounding the tracking of grant funding and related expenditures to ensure funds are used for their restricted use and that expenditures are properly supported. Views of Responsible Officials and Planned Corrective Actions: COVID 19 CARES Act funding is reported on a calendar year basis. Issues identified were timing issues involving accruals from one fiscal year to next. All of these issues were identified and corrected. CARES Act funding was allowed to be spent beginning 3/27/2020 (FY2020) and ending 12/31/2021 (FY2022) spanning 3 fiscal years. Findings above are attributable to audit of FY2021 only. Like other entities, CMHA experienced significant turnover in key personnel including the Finance Director and other tenured, knowledgeable employees. To ensure that all reporting is in compliance with regulations, CMHA has procured another CPA firm to assist with closing out the fiscal years of 2021 and 2022 while we continue to recruit and hire on qualified staff and provide industry training to personnel. All invoices totaling $340,703 were identified, accounted for and accrued to be paid with funds moved to COCC Operating Account for check disbursement. This was a timing issue where funds had to be moved at end of fiscal year prior to check disbursement at beginning of the following fiscal year. Invoices totaling $259,786 were accrued as an expense in FY2020, however funds were not received until October 2020 (FY2021). The accrual was not reversed, but was again recorded as an expense in October 2020 (FY2021). After this error was identified, the FY2020 accrual was reversed in FY2021, which resulted in no expense being reported in FY2021 when the funds were received. Again, CARES Act funding is reported on a calendar year basis. Regarding $478,006: In November 2020, the first CARES Act calculation, allocating expense to LIPH & HCV within the general ledger, was based on period 7/2020 11/2020 data. (Drawn 1/25/2021 FY 2021). However, in December 2020, the monthly calculation erroneously picked up 7/2020 11/2020 data in addition to 12/2020 data. (Drawn 8/3/2021 FY2022). The duplicated amount drawn of $478,006 was then allocated to additional allowable expenses incurred 7/2020 ? 10/2021. The amount of $2,850 was part of an accrual at 6/30/2021 (FY2021), then expensed later in FY2022 when the funds were drawn. This caused an overstatement of the expense in FY2021 (not the funding) and was corrected with reversal of the original accrued amount in FY2022. The amount of $100,811 was entered into the original COCC general ledger Trial Balance submitted for audit, then later taken out of the COCC general ledger and allocated to the proper programs utilizing the funds.

CFDA Number, Federal Agency, and Program Name: 14.871, U.S. Department of Housing and Urban Development, COVID-19 - Housing Voucher Cluster - Section 8 Housing Choice Vouchers; 14.871, U.S. Department of Housing and Urban Development, COVID-19 - Housing Voucher Cluster - Emergency Housing Vouchers (Section 8 Housing Choice Vouchers); 14.871, U.S. Department of Housing and Urban Development, Housing Voucher Cluster - Section 8 Housing Choice Vouchers; 14.879, U.S. Department of Housing and Urban Development, Housing Voucher Cluster - Mainstream Voucher Program; 14.850, U.S. Department of Housing and Urban Development, COVID-19 - Public and Indian Housing - Low-income Public Housing; 14.850, U.S. Department of Housing and Urban Development, Public and Indian Housing - Low-income Public Housing; 14.856, U.S. Department of Housing and Urban Development, Section 8 Project-Based Cluster - Lower Income Housing Assistance Program - Section 8 Moderate Rehab; 14.249, U.S. Department of Housing and Urban Development, Section 8 Project-Based Cluster - Section 8 Moderate Rehabilitation - Single Room Occupancy Program; 14.872, U.S. Department of Housing and Urban Development, Public Housing Capital Fund Program; 14.896, U.S. Department of Housing and Urban Development, Family Self Sufficiency Program Federal Award Identification Number and Year: N/A Pass through Entity: N/A Finding Type: Material weakness Repeat Finding: No Criteria: ?200.510(b) of the Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee?s financial statements which must include the total federal awards expended as determined in accordance with ?200.502 of the Uniform Guidance, ?Basis for Determining Federal Awards Expended.? Condition: The Authority was unable to properly prepare the SEFA so that it agreed to the underlying supporting expenditures and reconciled back to the general ledger. Questioned Costs: N/A Identification of How Questioned Costs Were Computed: N/A Context: During the course of our audit, we received multiple iterations of the SEFA. The original SEFA provided had several federal programs that did not reconcile back to the general ledger or underlying support. This included Project Based Section 8, Mainstream Vouchers, Housing Choice Vouchers (CARES Act funding), Public & Indian Housing (including CARES Act funding), Public Housing Capital Fund, and the Family Self Sufficiency Program. It also did not include Emergency Housing Vouchers (reported under the Housing Voucher Cluster). This resulted in audit adjustments to the SEFA and/or the general ledger to ensure that federal revenue and expenditures were appropriately reported both within the basic financial statements and on the SEFA, respectively. Cause and Effect: The Authority accounting personnel lacked the appropriate skill and knowledge to properly compile federal expenditures for reporting in the SEFA in accordance with the Uniform Guidance. This resulted in net audit adjustments of $150,991 to the general ledger and $1,484,252 to expenditures reported on the SEFA to ensure that federal revenue and expenditures agreed to underlying support. Recommendation: We recommend that management review their current controls over the preparation of the SEFA to ensure that controls are in place to appropriately report federal expenditures in accordance with the Uniform Guidance. In addition, management should assess the skill and knowledge of the key individuals responsible for maintaining books and records, as well as ensuring that individuals with responsibility for the accounting function have the appropriate training, be given the appropriate responsibilities, and that they have the appropriate time to perform their accounting functions, with appropriate oversight. Views of Responsible Officials and Planned Corrective Actions: No funds were inappropriately used. All documentation for tested expenditures was provided. The knowledge level of the staff lacked experience in how to report expenditures on the SEFA for RAD conversions and other non routine funding, resulting in an error in initial preparation of the SEFA submitted for audit. CMHA worked with the auditors and procured an outside CPA firm to correct the SEFA report submission that now reconciles back to the general ledger for final representation in the audit.

CFDA Number, Federal Agency, and Program Name - U.S. Department of Housing and Urban Development - Direct programs - Public and Indian Housing - Low-income Public Housing - 14.850 Federal Award Identification Number and Year - Not applicable Pass-through Entity - Not applicable Finding Type - Significant deficiency Repeat Finding - No Criteria - 24 CFR sections 960.202 - 960.206: The Authority must establish and adopt written policies for admission of tenants. The Authority'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. Condition - Some of the applicants admitted into the program were not selected in accordance with the Authority's tenant selection policy. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable Context - Identified errors for 2 out of 40 move-ins tested, which led to the applicants not being selected in accordance with the Authority's tenant selection policy due to the following: (1) One applicant was incorrectly assigned preference points without any support, resulting in them being pulled in the incorrect order prior to other applicants with valid preference points. (2) One applicant with no preference points was pulled in the incorrect order prior to other applicants with valid preference points. Cause and Effect - Controls in place have not resulted in the Authority consistently following procedures to ensure proper compliance to appropriately select tenants from the waitlist. Recommendation - The Authority should follow established procedures to ensure participant selection from the waitlist is properly supported. Views of Responsible Officials and Corrective Action Plan - To address the findings identified, Cincinnati Metropolitan Housing Authority (CMHA) has the following planned corrective action: (1) CMHA recognizes this error and will move to ensure preferences are allocated in accordance with the Admissions and Continued Occupancy Policy (ACOP). A 10 percent internal file review process of preferences will be implemented to ensure preferences are applied accurately. CMHA will conduct a three-part training on waitlist preferences, verifications, and the ACOP components. Also, a new eligibility preference checklist will be implemented for the applicant files confirming that all preferences have been verified and applied in accordance with the ACOP. Furthermore, as a result of PIH Notice 2019-26, which rescinded HUD?s previous notice on working preferences, CMHA has since removed the working preference as ones of its local preferences from its ACOP. (2) To ensure the accuracy of the asset management program housing offers and the waitlist sorting process, CMHA established a supervisory review process. This unit offer was not submitted through this process, and, therefore, the sorting error was not recognized prior to the housing offer. CMHA will reinstitute a monthly waitlist training for the next 12 months. Additionally, CMHA is completing the migration of its data to a new software system, Yardi. CMHA is confident this new software will produce more accurate reporting and system controls that were unavailable in the previous software.

GSA_MIGRATION