Indianapolis Housing AgencyLocal Government

Material Weakness in Internal Control over Compliance - Appropriate Internal Control Structure Related to Compliance Requirements.Recommendation: See finding 2022-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date. Criteria: 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Agency must, among other things, “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)”. Condition and Context: This finding has a pervasive effect on the Agency’s ability to maintain compliance over its award programs. The condition and context described in finding 2022-001 also relates to this finding. In addition to the condition and context noted above the following deficiencies were identified which stemmed from the deficiencies noted above and had an impact solely on internal control over compliance. a) Existing compliance requirements are not appropriately reviewed by management. i) Review was not completed to support tenants waitlist progression through the Housing Choice Voucher program. ii) Housing Choice Voucher tenant files are not appropriately reviewed to ensure documentation retained supports compliance requirements. iii) HUD reporting is not regularly reconciled to the trial balance. iv) Lack of controls in place to prevent transfers and use of restricted funds for unallowable purposes. This finding is a repeat finding of 2021-003 and 2020-003. Cause and Effect: As detailed above in finding 2022-001, in our opinion, the predominate reason for the finding is due to the lack of appropriate oversight in the finance department and the finance department not following the written policies of the Agency do to staffing constraints. The material weakness resulted in the noncompliance findings described below.

Criteria: 24 CFR 982.155 indicates Housing Choice Voucher Program (HCVP) administrative reserves must be used to pay program administrative expenses. HUD has indicated in PIH Notice 2005-01 HCVP administrative reserves are restricted solely for the HCVP and no other Agency administrative expenses. Condition and Context: The Agency used HCVP administrative reserves to cover Agency payroll expenses during 2022 and through the date the financial statements were available to be issued. The Agency also made errors in initially recording restricted funds received in the general ledger which resulted in journal entries and bank transfers necessary to appropriately record amounts received. The specific HCVP administrative reserves used to cover non-HCVP Agency payroll expenses were advanced as noted below. • $500,00 advanced on January 21, 2022. Amount not repaid as of the date the financial statements were available to be issued. • $200,000 advanced on March 10, 2022. Amount not repaid as of the date the financial statements were available to be issued. Cause and Effect: The predominate reason for the finding is due to cash flow concerns specific to payment of payroll and lack of controls surrounding transfer of funds from restricted accounts. This finding resulted in noncompliance with allowable use of HAP. Known Questioned Costs: $700,000 of HCV administrative reserves used to non-HCVP cover payroll expenses during 2022. Recommendation: See finding 2022-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.

Criteria: Management is responsible for maintaining appropriate documentation to substantiate tenant eligibility determinations and compliance with applicable special tests and provisions. Condition and Context: We selected a sample of 60 tenant files for testing Eligibility; Reporting - Special Reporting HUD-50058, Family Report; and Special Tests and Provisions: Selection for Waiting List, Reasonable Rent, Housing Quality Standards Inspections, and Housing Assistance Payment. Our sample was not statistically valid. Of the items selected we noted the following: 1) 7 of the 60 tenant files selected for testing were not able to be located. 2) 11 of the 60 tenant files selected for testing were missing documentation related to housing quality standards inspections. We also requested supporting documentation to show progression of tenants being moved through the waitlist and into the Housing Choice Voucher program. Management was unable to provide this information due to system limitations and lack of appropriate tracking of this data throughout the year. This is a repeat finding of 2021-005, 2020-005 and 2019-005. Cause and Effect: The seven missing tenant files resulted in an inability to make a determination on compliance for these tenants. Unsupported tenant eligibility determinations could impact future federal funding. The use of improper income related to eligibility resulted in noncompliance as relates to eligibility, rent reasonableness, and HAP. The inability to provide data to support the progression of the tenant waitlist resulted in an inability to make a determination on compliance for all tenants selected and could result in tenants being improperly added to the program. Recommendation: We recommend the Agency review current procedures surrounding maintenance of tenant files and waitlists to ensure adequacy of the procedures in place and identify areas of improvement to establish and maintain adequate internal controls over compliance. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.

Criteria: 24 CFR 982.404 requires public housing authorities to require an owner to correct any life-threatening deficiencies identified during housing quality standards (HQS) inspections within 24 hours of the inspection and all other HQS deficiencies within 30 days of the inspection or within a specifically approved extension. If deficiencies are not corrected in the required timeframe the public housing authority must abate HAPs beginning no later than the first of the month following the specified correction period or the HAP contract is to be terminated. Condition and Context: We reviewed the 2022 failed inspection listing provided by management and selected a sample of 60 failed inspections for testing. Our sample was not statistically valid. We noted 11 properties that had multiple failed inspections which were not moved to abatement. Recommendation: See finding 2022-001. Additionally, the auditor recommends the Agency review current procedures surrounding housing quality inspection standards to ensure accuracy of the procedures in place and identify areas of improvement to establish and maintain adequate internal control. This is a repeat finding of 2021-007 and 2020-007. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.

Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs. Condition and Context: We selected a sample of 20 different payroll entries related to time allocated to the Housing Choice Voucher program and requested supporting documentation for costs allocated to the grant. Our sample was not statistically valid. We reviewed payroll summary reports and paycheck detail to various programs, but noted that there were no timecards available for review or approval for any selection. It was noted that the payroll administrator was reviewing and approving the timecards, rather than a direct supervisor over the Section 8 program. Additionally, management indicated that timecards and payroll reports were not universally available due to system limitations and employee turnover. Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance. Recommendation: We recommend the review and approval of timecards be completed by a direct supervisor, that payroll records be regularly reviewed against timecards, and all supporting documentation for program costs be retained internally. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date

Criteria: HUD-52681-B is required to be submitted monthly electronically via the VMS. HUD relies on the audit of these key line items below to determine the reasonableness of the data submitted for the purpose of calculating funding under the program. Condition and Context: We obtained a summary of monthly VMS reporting from management noting that the key line items were unable to be reconciled to the trial balance by management. Specifically, HAP expenses reported on the trial balance are overstated by $3,530,690 relative to the HUD reporting. Cause and Effect: As described in 2022-001, the Agency has not maintained appropriate internal controls over compliance. Lack of regular reconciliation of HAP expenses to the HUD reporting referenced above resulted in the inability to reconcile at year end. Recommendation: We recommend that monthly VMS reporting be reconciled to the trial balance to ensure accurate reporting. This is a repeat finding of 2021-010. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.

Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs. Condition and Context: During our testing of expenditures obligated during the year, we were made aware of the fact that management had invertedly duplicated a draw of funds totaling $303,024.92. This error was not discovered until several months after the fact. Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance. Recommendation: See finding 2022-001, specifically the recommendation relating to appropriate oversight in the finance department. We recommend that the finance department continue to hire and train its employees on various programmatic requirements and resources, to ensure compliance with both existing and new federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.

Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs. Condition and Context: We selected a sample of 12 different program related disbursement and requested supporting documentation for costs allocated to the grant. Our sample was not statistically valid. We reviewed invoice and payment detail to for each selection, but noted that there were no POs available for review or approval for any selection. Cause and Effect: As described in 2022-001 and 2022-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance. Recommendation: See finding 2022-001, specifically the recommendation relating to appropriate oversight in the finance department. We recommend that the finance department continue to hire and train its employees on various programmatic requirements and resources, to ensure compliance with both existing and new federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.

2021-003 Housing Voucher Cluster ? Assistance Listing Nos. 14.871 & 14.879 Material Weakness in Internal Control over Compliance ? Appropriate Internal Control Structure Related to Compliance Requirements Criteria: 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Agency must, among other things, ?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)?. Condition and Context: This finding has a pervasive effect on the Agency?s ability to maintain compliance over its award programs. The condition and context described in finding 2021-001 also relates to this finding. In addition to the condition and context noted above the following deficiencies were identified which stemmed from the deficiencies noted above and had an impact solely on internal control over compliance. a) Compliance requirements for new funding received during 2021 were not appropriately followed due to lack of knowledge surrounding new program requirements. i) Assistance listing required for Emergency Housing Voucher (EHV) program reporting was not appropriately reported on the SEFA. ii) EHV Funds were not appropriately segregated and tracked separately, as required in PIH Notice 2021-25. iii) Significant adjustments were needed to appropriately record EHV funding on the SEFA. b) Existing compliance requirements are not appropriately reviewed by management. i) Review was not completed to support tenants waitlist progression through the Housing Choice Voucher program. ii) Housing Choice Voucher tenant files are not appropriately reviewed to ensure documentation retained supports compliance requirements. iii) HUD reporting is not regularly reconciled to the trial balance. iv) Lack of controls in place to prevent transfers and use of restricted funds for unallowable purposes. This finding is a repeat finding of 2020-003. Cause and Effect: As detailed above in finding 2021-001, in our opinion, the predominate reason for the finding is due to the lack of appropriate oversight in the finance department and the finance department not following the written policies of the Agency do to staffing constraints. The material weakness resulted in the noncompliance findings described below, as well as the material adjustments to the SEFA noted in finding 2021-001. Recommendation: See finding 2021-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency?s response and planned completion date.

2021-004 Housing Voucher Cluster ? Assistance Listing Nos. 14.871 & 14.879 Noncompliance ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 24 CFR 982.155 indicates Housing Choice Voucher Program (HCVP) administrative reserves must be used to pay program administrative expenses. HUD has indicated in PIH Notice 2005-01 HCVP administrative reserves are restricted solely for the HCVP and no other Agency administrative expenses. Condition and Context: The Agency used HCVP administrative reserves to cover Agency payroll expenses during 2021 and through the date the financial statements were available to be issued. The Agency also made errors in initially recording restricted funds received in the general ledger which resulted in journal entries and bank transfers necessary to appropriately record amounts received. Additionally, the former Executive Director changed the allocation of his compensation from 100% to the central office cost center (COCC) to 62.90% to the HVCP, 17.10% to Agency properties (1.90% to each property) and 20% to the COCC. The condition and context described in finding 2021-002 also relates to this finding. The specific HCVP administrative reserves used to cover non-HCVP Agency payroll expenses were advanced as noted below. ? $500,000 advanced on October 15, 2021. Repaid to HCVP on November 22, 2021. ? $500,000 advanced on January 21, 2022. Amount not repaid as of the date the financial statements were available to be issued. ? $200,000 advanced on March 10, 2022. Amount not repaid as of the date the financial statements were available to be issued. ? $100,762 of the former Executive Director compensation retroactively allocated to HVCP during 2021. Amount not repaid as of the date the financial statements were available to be issued. Cause and Effect: The predominate reason for the finding is due to cash flow concerns specific to payment of payroll and lack of controls surrounding transfer of funds from restricted accounts. This finding resulted in noncompliance with allowable use of HAP. Known Questioned Costs: $600,762 and $700,000 of HCV administrative reserves used to non-HCVP cover payroll expenses during 2021 and 2022, respectively, through the date the financial statements were available to be issued. Recommendation: See finding 2021-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency?s response and planned completion date.

2021-005 Housing Voucher Cluster ? Assistance Listing Nos. 14.871 & 14.879 Material Weakness in Internal Control over Compliance and Noncompliance ? Eligibility; Reporting ? Special Reporting HUD-50058, Family Report; and Special Tests and Provisions: Selection from the Waiting List, Reasonable Rent, Housing Quality Standards Inspections, and Housing Assistance Payment Criteria: Management is responsible for maintaining appropriate documentation to substantiate tenant eligibility determinations and compliance with applicable special tests and provisions. Condition and Context: We selected a sample of 60 tenant files for testing Eligibility; Reporting ? Special Reporting HUD-50058, Family Report; and Special Tests and Provisions: Selection for Waiting List, Reasonable Rent, Housing Quality Standards Inspections, and Housing Assistance Payment. Our sample was not statistically valid. Of the items selected we noted the following: 1) 2 of the 60 tenant files selected for testing were not able to be located. 2) 2 of the 60 tenant files selected for testing were missing documentation related to eligibility requirements. 3) 8 of the 60 tenant files selected for testing used improper income to determine eligibility, reasonable rent, and HAP. 4) 27 of the 60 tenant files selected for testing were missing documentation related to housing quality standards inspections. We also requested supporting documentation to show progression of tenants being moved through the waitlist and into the Housing Choice Voucher program. Management was unable to provide this information due to system limitations and lack of appropriate tracking of this data throughout the year. This is a repeat finding of 2020-005 and 2019-005. Cause and Effect: The two missing tenant files resulted in an inability to make a determination on compliance for these tenants. Unsupported tenant eligibility determinations could impact future federal funding. The use of improper income related to eligibility resulted in noncompliance as relates to eligibility, rent reasonableness, and HAP. The inability to provide data to support the progression of the tenant waitlist resulted in an inability to make a determination on compliance for all tenants selected and could result in tenants being improperly added to the program. Recommendation: We recommend the Agency review current procedures surrounding maintenance of tenant files and waitlists to ensure adequacy of the procedures in place and identify areas of improvement to establish and maintain adequate internal controls over compliance. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency?s response and planned completion date.

2021-006 Housing Voucher Cluster ? Assistance Listing Nos. 14.871 & 14.879 Noncompliance ? Special Tests and Provisions: Depository Agreements Criteria: 24 CFR 982.156 requires public housing authorities to enter into depository agreements with financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third-party rights to HUD. Condition and Context: We reviewed the depository agreement on file with HUD compared to the cash accounts listed in the general ledger and identified 19 accounts which were anticipated to be included in the depository agreement with HUD. We noted 10 cash accounts listed in the general ledger which were excluded from the HUD depository agreement. We noted 2 of the accounts which were excluded from the depository agreement were opened in 2021. This is a repeat finding of 2020-006. Cause and Effect: As described in item 2021-003, the Agency has not maintained appropriate internal controls over compliance. As a result, the Agency did not properly review the HUD depository agreement for compliance with compliance requirements and improperly excluded cash accounts from the agreement and/or failed to update the depository agreement with HUD in a timely manner. Recommendation: See finding 2021-001, specifically the recommendation relating to appropriate oversight in the finance department. We recommend that the finance department continue to hire and train its employees on various programmatic requirements and resources, to ensure compliance with both existing and new federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions: Management indicated that the appropriate depository agreements were updated during 2022 prior to the date the financial statements were available to be issued.

2021-007 Housing Choice Voucher Cluster ? Assistance Listing No. 14.871 & 14.879 Noncompliance ? Special Tests and Provisions: Housing Quality Standards Inspections Criteria: 24 CFR 982.404 requires public housing authorities to require an owner to correct any life-threatening deficiencies identified during housing quality standards (HQS) inspections within 24 hours of the inspection and all other HQS deficiencies within 30 days of the inspection or within a specifically approved extension. If deficiencies are not corrected in the required timeframe the public housing authority must abate HAPs beginning no later than the first of the month following the specified correction period or the HAP contract is to be terminated. Condition and Context: We reviewed the 2021 failed inspection listing provided by management and selected a sample of 60 failed inspections for testing. Our sample was not statistically valid. We noted 33 deficiencies that were required to be corrected within 30 days which were not met. Furthermore, we noted 33 properties that had multiple failed inspections which were not moved to abatement. This is a repeat finding of 2020-007. Cause and Effect: As described in item 2021-003, the Agency has not maintained appropriate internal controls over compliance. As a result, the Agency did not properly review the failed inspections and activity around the inspections resulting in violation not being corrected in the required timeframe, as well as properties not being correctly transferred to abatement upon multiple failed inspections. Recommendation: See finding 2021-001. Additionally, we recommend the Agency review current procedures surrounding housing quality inspection standards to ensure adequacy of the procedures in place and identify areas of improvement to establish and maintain adequate internal controls over compliance. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency?s response and planned completion date.

2021-008 Housing Voucher Cluster ? Assistance Listing Nos. 14.871 & 14.879 Noncompliance ? Special Tests and Provisions: CARES Act Funding - Emergency Housing Voucher Criteria: PIH Notice 2021-25 requires EHV funds to be reported by management under Assistance Listing No. 14.871 Housing Choice Voucher Program. PIH Notice 2021-25 also requires Emergency Housing Voucher Funds to be tracked by the four different fee types (Preliminary Fee, Placement Fee/ Expenditure Issuance Reporting Fee, On-going Administrative Fee, Services Fee) by amounts received, the amount of expense incurred by fee type, and how much is unspent. Condition and Context: The SEFA provided by management improperly classified the EHV Assistance Listing No. Management was also unaware of PIH 2021-15 guidance regarding the policies needed to appropriately account and track the fees, by fee type as required above. Cause and Effect: As described in 2021-003, the Agency has not maintained appropriate internal controls over compliance. As a result, the Agency does not have staffing in the finance department with appropriate program knowledge to review and ensure compliance with PIH Notices issued throughout the year. Recommendation: We recommend that the finance department continue to hire and train its employees on various programmatic requirements and resources, to ensure compliance with both existing and new federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency?s response and planned completion date.

2021-009 Housing Voucher Cluster ? Assistance Listing Nos. 14.871 & 14.879 Noncompliance ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.403 (g) requires adequate documentation to be retained to support allowable activities/costs. Condition and Context: We selected 10 employees that had time allocated to the Housing Choice Voucher program and requested supporting documentation for their payroll costs during 9 pay periods throughout the year. Our sample was not statistically valid. We reviewed timecards and allocations of payroll costs to various programs, noting that 2 employees had timecards that did not agree to the payroll reports. It was noted that the payroll administrator was reviewing and approving the timecards, rather than a direct supervisor over the Section 8 program. Additionally, management indicated that timecards and payroll reports were not universally available due to system limitations and employee turnover. Cause and Effect: As described in 2021-001 and 2021-003, the Agency has not maintained appropriate internal controls over compliance. Lack of appropriate supervisory review and approval, along with managements review of record retention resulted in the noncompliance. Recommendation: We recommend the review and approval of timecards be completed by a direct supervisor, that payroll records be regularly reviewed against timecards, and all supporting documentation for program costs be retained internally. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency?s response and planned completion date.

2021-010 Housing Voucher Cluster ? Assistance Listing Nos. 14.871 & 14.879 Noncompliance - Reporting Criteria: HUD-52681-B is required to be submitted monthly electronically via the VMS. HUD relies on the audit of these key line items below to determine the reasonableness of the data submitted for the purpose of calculating funding under the program. Condition and Context: We obtained a summary of monthly VMS reporting from management noting that the key line items were unable to be reconciled to the trial balance by management. Specifically, HAP expenses reported on the trial balance are overstated by $1,766,928 relative to the HUD reporting. Cause and Effect: As described in 2021-001, the Agency has not maintained appropriate internal controls over compliance. Lack of regular reconciliation of HAP expenses to the HUD reporting referenced above resulted in the inability to reconcile at year end. Recommendation: We recommend that monthly VMS reporting be reconciled to the trial balance to ensure accurate reporting. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency?s response and planned completion date.

2021-011 Housing Voucher Cluster ? Assistance Listing Nos.14.871 & 14.879 Noncompliance ? Reporting: Financial Reports; Special Tests and Provisions: CARES Act Funding Criteria: 4 CFR section 5.801 requires PHAs to submit timely GAAP-based unaudited and audited financial information electronically to HUD. Additionally, PIH Notice 2020-24 and 2021-25 added on specific FDS reporting requirements for COVID-19 and Emergency Housing Voucher programs, respectively. Condition and Context: To determine whether the FDS reporting was derived from the trial balance, we attempted to reconcile the unaudited FDS submission to the trial balance based on the fund codes utilized to separately track these programs. Significant adjustments were needed in addition to assistance from the third-party consultant in order to reconcile the data. Significant adjustments were needed between unaudited and audited FDS reporting. Cause and Effect: As described in 2021-001, the Agency has not maintained appropriate internal controls over compliance. As a result, the Agency does not have staffing in the finance department with appropriate program knowledge to ensure compliance with the recognition criteria for federal awards. Recommendation: We recommend that the finance department continue to hire and train its employees on various programmatic requirements and resources, to ensure compliance with both existing and new federal compliance requirements. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency?s response and planned completion date.

2020-003 Housing Choice Voucher Cluster ? CFDA #14.871 & 14.879 Material Weakness in Internal Control over Compliance ? Appropriate Control Environment Related to Compliance Requirements Criteria: 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Agency must, among other things, ?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)?. Condition and Context: This finding has a pervasive effect on the Agency?s ability to maintain compliance over its award programs. The condition and context described in finding 2020-001 also relates to this finding. Cause and Effect: As detailed above in finding 2020-001, in our opinion, the predominate reason for the finding is due to the lack of appropriate oversight in the finance department and the finance department not following the written policies of the Agency do to staffing constraints. The material weakness resulted in the noncompliance findings described below in items 2020-004 and 2020-006, as well as the material adjustments to the SEFA noted in finding 2020-001. Recommendation: See finding 2020-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation and plans to have the corrective action implemented by March 31, 2022.

2020-004 Housing Choice Voucher Cluster ? CFDA #14.871 & 14.879 Noncompliance ? Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: 2 CFR 200.407(n) and 2 CFR 200.441 includes requirements for non-Federal entities to obtain prior written approval for fines, penalties, damages, and other settlements. Condition and Context: We scanned disbursements and judgmentally selected a sample of 5 disbursements for testing activities allowed or unallowed and allowable costs/cost principles of transactions which were not housing assistance payments (HAP) or utility assistance payments (UAP). We noted one disbursement for $199,604 which was a settlement improperly paid out of the housing choice voucher program for the Office of the Inspector General (OIG). OIG required the settlement to be repaid from non-federal and non-HUD funds. The Agency has since refunded the housing choice voucher program and is working with the OIG and HUD to determine an appropriate source of funds for the settlement. Our selection covered $214,753 of the $380,194 of disbursements in the population. Since auditor judgement was used in selecting the items for testing, the selection was not a random sample and likely questioned costs could not be extrapolated. Known Questioned Costs: $199,604 Cause and Effect: As described in item 2020-003, the Agency has not maintained appropriate internal controls over compliance and the finance department lack key members of oversight. As a result, the Agency improperly approved the payment of the settlement noted above and could approve more improper disbursements. Recommendation: See finding 2020-001, specifically the recommendation relating to appropriate oversight in the finance department. Once appropriate key roles are filled, the Agency should ensure these individuals are knowledgeable of both the compliance requirements and internal controls over compliance established by the Agency to ensure proper review and approval of disbursements occurs. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation and plans to have the corrective action implemented by December 31, 2021.

2020-005 Housing Choice Voucher Cluster ? CFDA #14.871 & 14.879 Material Weakness in Internal Control over Compliance and Noncompliance ? Eligibility; Reporting ? Special Reporting HUD-50058, Family Report; and Special Tests and Provisions: Selection for Waiting List, Reasonable Rent, Housing Quality Standards Inspections, and Housing Assistance Payment Criteria: Management is responsible for maintaining appropriate documentation to substantiate tenant eligibility determinations and compliance with applicable special tests and provisions. Condition and Context: We selected a sample of 60 tenant files for testing Eligibility; Reporting ? Special Reporting HUD-50058, Family Report; and Special Tests and Provisions: Selection for Waiting List, Reasonable Rent, Housing Quality Standards Inspections, and Housing Assistance Payment. Of the items selected we noted the following: 1) 2 of the 60 tenant files selected for testing were not able to be located. 2) 2 of the 60 tenant files selected for testing were missing documentation related to eligibility requirements. 3) 3 of the 60 tenant files selected for testing were missing documentation related to reasonable rent. 4) 7 of the 60 tenant files selected for testing were missing documentation related to eligibility housing quality standards inspections. This is a repeat finding of 2019-005. Cause and Effect: The two missing tenant files resulted in an inability to make a determination on compliance for these tenants. Unsupported tenant eligibility determinations could impact future federal funding. Recommendation: We recommend the Agency review current procedures surrounding maintenance of tenant files to ensure adequacy of the procedures in place and identify areas of improvement to establish and maintain adequate internal controls over compliance. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation and plans to have the corrective action implemented by December 31, 2021.

2020-006 Housing Choice Voucher Cluster ? CFDA #14.871 & 14.879 Noncompliance ? Special Tests and Provisions ? Depository Agreements Criteria: 24 CFR 982.156 requires public housing authorities to enter in to depository agreements with financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third-party rights to HUD. Condition and Context: We reviewed the depository agreement on file with HUD compared to the cash accounts listed in the general ledger and identified 17 accounts which were anticipated to be included in the depository agreement with HUD. We noted 8 cash accounts listed in the general ledger which were excluded from the HUD depository agreement. We noted 3 of the accounts which were excluded from the depository agreement were opened in 2020. Cause and Effect: As described in item 2020-003, the Agency has not maintained appropriate internal controls over compliance. As a result, the Agency did not properly review the HUD depository agreement for compliance with compliance requirements and improperly excluded cash accounts from the agreement and/or failed to update the depository agreement with HUD in a timely manner. Recommendation: See finding 2020-001, specifically the recommendation relating to appropriate oversight in the finance department. Once appropriate key roles are filled, the Agency should ensure these individuals are knowledgeable of both the compliance requirements and internal controls over compliance established by the Agency to ensure proper review of depository agreements occurs. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation and plans to have the corrective action implemented by December 31, 2021.

2020-007 Housing Choice Voucher Cluster ? CFDA #14.871 & 14.879 Noncompliance ? Special Tests and Provisions ? Housing Quality Standards Inspections Criteria: 24 CFR 982.404 requires public housing authorities to require an owner to correct any life threatening deficiencies identified during housing quality standards (HQS) inspections within 24 hours of the inspection and all other HQS deficiencies within 30 days of the inspection or within a specifically approved extension. If deficiencies are not corrected in the required timeframe the public housing authority must abate HAPs being no later than the first of the month following the specified correction period or the HAP contract is to be terminated. Condition and Context: We reviewed the 2020 failed inspection listing provided by management and selected a sample of 25 failed inspections for testing. We noted 2 instances where deficiencies that required a 24 hour timeframe for correction were not met. In addition, 16 deficiencies that were required to be corrected within 30 days were not met. We noted 2 instances where inspections reports could not be provided and 9 instances where documentation was missing from the files provided. Furthermore, we noted 9 properties that had multiple failed inspections which were not moved to abatement and 4 properties with multiple failed inspection for which management could not provide supporting documentation for the property being moved to abatement. Cause and Effect: As described in item 2020-003, the Agency has not maintained appropriate internal controls over compliance. As a result, the Agency did not properly review the failed inspections and activity around the inspections resulting in violation not being corrected in the required timeframe, as well as, properties not being corrected transferred to abatement upon multiple failed inspections. Recommendation: See finding 2020-001, specifically the recommendation relating to appropriate oversight in the finance department. Once appropriate key roles are filled, the Agency should ensure these individuals are knowledgeable of both the compliance requirements and internal controls over compliance established by the Agency to ensure proper review of depository agreements occurs. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation and plans to have the corrective action implemented by December 31, 2021.

2019-005 Section 8 Tenant Files ? Document Retention (Significant Deficiency) Information on the Federal Program: Department of Housing and Urban Development, Housing Voucher Cluster, CFDA Numbers 14.871 and 14.879 Condition: During our revenue and tenant file testing of 60 participants who received assistance through the Section 8 Housing Choice Vouchers program, we noted missing documentation in 10 of the tenant files tested. Criteria: Management is responsible for maintaining appropriate documentation to substantiate the recognition of rental subsidy income and support the eligibility determination. Questioned Cost: $0 Context: While there were multiple files with missing documentation, no individual file lacked documentation to the extent that eligibility was deemed questionable. Effect: Lack of documentation surrounding the determination and verification of participant eligibility may result in ineligible participants receiving benefits and thus the inappropriate recognition of revenue. Lack of documentation could represent instances of non-compliance with federal regulations that could impact future funding. Cause: The missing documentation identified seem to be the result of ineffective quality control processes or purging of information in older tenant files. Repeat Finding: No Recommendation: We recommend that the Agency implement procedures to ensure that all required documentation is maintained in the files and that controls are in place to ensure revenue recognized is adequately supported and compliance with these requirements. Views of Responsible Officials and Corrective Actions: See Corrective Plan

2019-006 Section 8 Allowable Cost Testing (Significant Deficiency) Information on the Federal Program: Department of Housing and Urban Development, Housing Voucher Cluster, CFDA Numbers 14.871 and 14.879 Condition: We noted one non-HAP expenditure for which management was unable to provide supporting documentation. Additionally, we noted 5 non-HAP expenditures (including the one noted above) for which management was unable to provide formal documentation of proper approval. Criteria: Management is responsible for maintaining appropriate documentation to substantiate the expenditure of funds in accordance with program requirements. Questioned Cost: Known: $3,990 Context: We selected 15 non-HAP expenditures for the Section 8 Housing Choice Vouchers program totaling $87,477 of the total $738,240 non-HAP expenditures. The expenditure for which no supporting documentation could not be provided was considered a questioned cost since we were unable to determine eligibility. Effect: A lack of appropriate supporting documentation or formal review puts the Agency at an increased risk that ineligible expenditures could be incurred. Cause: The missing documentation identified seem to be the result of ineffective quality control processes. Repeat Finding: No Recommendation: We recommend that the Agency implement procedures to ensure that all required supporting documentation is maintained and that internal controls are in place to ensure expenditures are being properly reviewed. Views of Responsible Officials and Corrective Actions: See Corrective Plan