Iron County Housing CommissionLocal Government

During the review of tenant files, 11 out of 25 annual inspections that had failed were not reinspected within the appropriate timeframe. N. SPECIAL TESTS AND PROVISIONS ITEM 4. HOUSING QUALITY INSPECTIONS AND ITEM 5. HQS ENFORCEMENT: 24 CFR Section 982.158(d) requires a PHA to perform a quality inspection yearly and reinspect any failed inspections with 24 hours for life threatening items or 30 days for non-life threatening items. The Commission did not have effective internal controls over HQS inspections. Unknown. The Commission is not in compliance with the requirements as outlined in the special tests and provisions, housing quality inspections and HQS enforcement sections above. Lack of controls over grant requirements. The Commission should implement policies and procedures to ensure all federal compliances are followed pertaining to housing quality inspections and HQS enforcement. Management is still in the process of implementing policies and procedures to ensure all inspections are performed in a timely manner and all re-inspections are performed within the required timeframe.

Finding 2023-001 Statement of Condition: During the review of tenant files, it was noted 3 out of 25 annual inspections were not completed in the fiscal year under audit and 1 out of 25 annual inspections that had failed and was not reinspected within the appropriate timeframe was deemed life threatening. Criteria: N. SPECIAL TESTS AND PROVISIONS ITEM 4. HOUSING QUALITY INSPECTIONS AND ITEM 5. HQS ENFORCEMENT: 24 CFR Section 982.158(d) requires a PHA to perform a quality inspection yearly and reinspect any failed inspections with 24 hours for life threatening items or 30 days for non-life threatening items. Perspective Information: The Commission did not have effective internal controls over HQS inspections. Questioned Costs: Unknown. Effect: The Commission is not in compliance with the requirements as outlined in the special tests and provisions, housing quality inspections and HQS enforcement sections above. Cause: Lack of controls over grant requirements. Recommendation: The Commission should implement policies and procedures to ensure all federal compliances are followed pertaining to housing quality inspections and HQS enforcement. Management’s Response: Management is still in the process of implementing policies and procedures to ensure all inspections are performed in a timely manner and all re-inspections are performed within the required timeframe.

Finding 2023-002 Statement of Condition: It was noted the Commission has not updated its utility allowance schedule since 2013. Criteria: N. SPECIAL TESTS AND PROVISIONS ITEM 3. UTILITY ALLOWANCE SCHEDULE: 24 CFR Section 982.517 requires a PHA to maintain an up to date utility allowance schedule. Perspective Information: The Commission did not have effective internal controls over the utility allowance schedule. Questioned Costs: Unknown. Effect: The Commission is not in compliance with the requirements as outlined in the special tests and provisions, utility allowance schedule section above. Cause: Lack of controls over grant requirements. Recommendation: The Commission should implement policies and procedures to ensure the utility allowance schedule is updated yearly. Management’s Response: Management has updated its utility allowance effective beginning in November 2023.

Statement of Condition: During the review of low rent tenant files, it was noted there was insufficient documentation of a second party review on all files, one tenant file could not be located, 2 out of 10 files selected for testing lacked the signature of the head of household, 2 out of 10 files selected for testing lacked sufficient support for a zero income individual, 2 out of 10 files selected for testing did not report state amounts for SSI. Criteria: 2 CFR Part 200 Subpart F requires the Commission to determine income eligibility and calculate the tenant?s rent payment using the documentation from third party verification. 2 CFR Part 200 Subpart F requires the Commission to have effective internal controls and accountability must be maintained for all funds. Perspective Information: Asset accounts, sources of income, and medical expenses are required to be verified with the third party annually. Additionally, the Commission did not have adequate policies and procedures in place for accountability of its tenant files. Questioned Costs: Projection of net errors identified in sample: $2,043. Effect: Tenant annual certifications and interim re-examinations may be calculated incorrectly. Cause: Ineffective review process over the certification of tenant files and/or lack of knowledge of HUD regulation regarding rent certifications. Recommendation: The Commission should consider reviewing its current policy regarding rent certifications. The Commission should ensure all persons involved in the certification process are properly trained and understand regulations in order to accurately identify errors. The Commission should adopt policies and procedures that would require a second person to be involved in the certification process to ensure the accountability of tenant files. The reviewer should sign and date the verification form, evidencing the control is being performed. Management?s Response: New management has taken over the Commission subsequent to the period under audit and will ensure all staff members involved in the annual recertification and interim examinations are properly trained with respect to the rules and regulations pertaining to this process. Management will also implement stronger internal controls and policies regarding rent certifications.

Statement of Condition: During the review of tenant files it was noted there was insufficient documentation of a second party review on all files, 2 out of 25 files selected for testing did not report State of Michigan amounts for SSI, 2 out of 25 files selected for testing reported family contributions that were not taken into consideration when HAP was calculated, 1 out of 25 files selected for testing showed employment amounts were taken from EIV rather than from third party support resulting in the wrong employer and wages being reported, and it was noted there was a lack sufficient support for zero income individuals. Criteria: E. ELIGIBILITY: 2 CFR Part 200 Subpart F requires a PHA to have an eligible operating fund expenditure that is due and payable within 3 days of disbursing funds from the capital fund. Perspective Information: The Commission did not have effective internal controls over eligibility for the federal program. Questioned Costs: Unknown. Effect: The Commission is not in compliance with the requirements as outlined in the eligibility section above. Cause: Lack of controls over grant requirements. Recommendation: The Commission should implement policies and procedures to ensure all federal compliances are followed pertaining to eligibility. Management?s Response: New management has taken over the Commission subsequent to the period under audit and will ensure all staff members involved in the annual recertification and interim examinations are properly trained with respect to the rules and regulations pertaining to this process. Management will also implement stronger internal controls and policies regarding rent certifications.

Finding 2022-004 Statement of Condition: During the review of tenant files it was noted 8 out of 11 new move-ins did not have support of being selected from the waiting list prior to entry into the program. Upon discussion with client it was noted the Commission does not routinely maintain such support. Criteria: N. SPECIAL TESTS AND PROVISIONS ITEM 1. SELECTION FROM THE WAITING LIST: 24 CFR Section 5.410 requires a PHA to ensure all families admitted to the program must be selected from the waiting list. Perspective Information: The Commission did not have effective internal controls over selection from the waiting list for the federal program. Questioned Costs: Unknown. Effect: The Commission is not in compliance with the requirements as outlined in the special tests and provisions, selection from the waiting list section above. Cause: Lack of controls over grant requirements. Recommendation: The Commission should implement policies and procedures to ensure all federal compliances are followed pertaining to selection from the waiting list. Management?s Response: New management has taken over the Commission subsequent to the period under audit and will implement stronger internal controls over ensuring support of selection from the waiting list is maintained in the tenant files.

Finding 2022-005 Statement of Condition: During the review of tenant files it was noted 1 out of 25 annual inspections could not be located, noted 2 out of 25 annual inspections had failed and were not reinspected within the appropriate timeframe, including one that was considered life threatening. Criteria: N. SPECIAL TESTS AND PROVISIONS ITEM 4. HOUSING QUALITY INSPECTIONS AND ITEM 5. HQS ENFORCEMENT: 24 CFR Section 982.158(d) requires a PHA to perform a quality inspection yearly and reinspect any failed inspections with 24 hours for life threatening items or 30 days for non-life threatening items. Perspective Information: The Commission did not have effective internal controls over HQS inspections. Questioned Costs: Unknown. Effect: The Commission is not in compliance with the requirements as outlined in the special tests and provisions, housing quality inspections and HQS enforcement sections above. Cause: Lack of controls over grant requirements. Recommendation: The Commission should implement policies and procedures to ensure all federal compliances are followed pertaining to housing quality inspections and HQS enforcement. Management?s Response: New management has taken over the Commission subsequent to the period under audit and will implement stronger internal controls over housing quality inspections.

Finding 2022-006 Statement of Condition: It was noted the Commission has not updated its utility allowance schedule since 2013. Criteria: N. SPECIAL TESTS AND PROVISIONS ITEM 3. UTILITY ALLOWANCE SCHEDULE: 24 CFR Section 982.517 requires a PHA to maintain an up to date utility allowance schedule. Perspective Information: The Commission did not have effective internal controls over the utility allowance schedule. Questioned Costs: Unknown. Effect: The Commission is not in compliance with the requirements as outlined in the special tests and provisions, utility allowance schedule section above. Cause: Lack of controls over grant requirements. Recommendation: The Commission should implement policies and procedures to ensure the utility allowance schedule is updated yearly. Management?s Response: New management has taken over the Commission subsequent to the period under audit and will implement stronger internal controls over the utility allowance schedule.

Criteria: As a condition of admission or continued occupancy, the PHA must require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 960.259). Condition: During our testing, we noted that the Commission failed to obtain signatures from the heads of household and/or other adults over eighteen years of age to verify eligibility with the above stated criteria. Questioned Costs: None Context: From a sample of seventeen (17) program participant files selected for testing, three files did not have signatures from the heads of household and/or other adults over eighteen years of age on the HUD Form 9886, and two files did not have signatures from the head of household on the Tenant Personal Declaration of the recertification. The sample was a statistically valid sample. Cause: The Commission did not obtain the required signatures from the other heads of household and/or the adults over eighteen years of age within the household to verify eligibility. Effect: Four program participant files did not contain the required tenant signatures in accordance with the above criteria. If the deficiencies found are not corrected, the heads of household and/or adult individuals beyond the head of household may not be eligible for the program. Repeat Finding: Yes

Criteria: The Executive Director's timecards are required to be signed by the Executive Director and the Board President to indicate review and approval prior to payment according to ICHC's internal processes. Condition: During our testing, we noted that the Executive Director and/or the Board President failed to sign off on the Executive Director's timecard prior to payment. Questioned Costs: None Context: From a sample of thirteen (13) payroll disbursements selected for testing, three (3) of the Executive Director's timecards were not signed by the Executive Director and/or the Board President prior to payment. Cause: The Executive Director and/or the Board President failed to sign off on the Executive Director's timecard prior to payment. Effect:Unapproved or fraudulent payroll may be paid. Repeat Finding: No

Criteria: PHAs are required to use insurance proceeds to promptly restore, reconstruct, and/or repair any damaged or destroyed property of a project, except when a PHA has written approval from HUD to do otherwise. Unspent insurance proceeds normally are recorded as restricted cash or restricted investments on the FDS up to the amount of the repair. Insurance proceeds received in advance of contractor or repair bills are required to be placed in a restricted cash account of the operating fund. Condition: During our testing, we noted that the Commission failed to place insurance proceeds in a restricted cash account of the operating fund. Questioned Costs: None Context: From the entire population of insurance proceeds received in fiscal year ended September 30, 2021, the insurance proceeds received were recorded into the General Fund Unrestricted cash account within the general ledger, and were deposited into the general checking bank account. Cause: The Commission failed to record and deposit insurance proceeds into a restricted cash account of the operating fund. Effect: Insurance proceeds may be used for cover costs that are not allowable. Repeat Finding: No

Criteria: As a condition of admission or continued occupancy, the PHA must require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR sections 5.230, 5.609, and 960.259).Condition: During our testing, we noted that the Commission failed to obtain signatures from the other adults over eighteen years of age within the household to verify income eligibility with the above stated criteria.Questioned Costs: NoneContext: From a sample of twenty-one (21) program participant files selected for testing, four files did not have signatures from the other adults over eighteen years of age within the household for the third party Enterprise Income Verification report, the HUD Form 9886, and the Tenant Personal Declaration of the recertification. The sample was a statistically valid sample.Cause: The Commission did not obtain the required signatures from the other adults over eighteen years of age within the household to verify income eligibility.Effect: Four program participant files did not contain the required tenant signatures in accordance with the above criteria. If the deficiencies found are not corrected, adult individuals beyond the head of household may not be eligible for the program.Repeat Finding: NoRecommendation: We recommend that management create an internal monitoring system to ensure that all necessary documents are appropriately signed by all adults over eighteen years of age, the documentation is appropriately included in the participant?s file, and the documentation meets all program guidelines.

Criteria: Most PHAs devise their own application forms that are filled out by the PHA staff during an interview with the tenant. The head of household signs (a) a certification that the information provided to the PHA is correct; (b) one or more release forms to allow the PHA to get information from third parties; (c) a federally prescribed general release form for employment information; and (d) a privacy notice. Under some circumstances, other members of the family may be required to sign these forms (24 CFR sections 5.212, 5.230, and 5.601 through 5.615).Condition: During our testing, we noted that the Commission failed to obtain signatures from the head of house for the third party Enterprise Income Verification (EIV) report.Questioned Costs: NoneContext: From a sample of twenty-one (21) program participant files selected for testing, two files did not have signatures from the head of household on the EIV report to verify income eligibility. The sample was a statistically valid sample.Cause: The Commission did not obtain the required signatures from the head of household to verify income eligibility.Effect: Two program participant files did not contain the required tenant signatures in accordance with the above criteria. If the deficiencies found are not corrected, the head of household may not be eligible for the program.Repeat Finding: NoRecommendation: We recommend that management create an internal monitoring system to ensure that all necessary documents are appropriately signed by all adults over eighteen years of age, the documentation is appropriately included in the participant?s file, and the documentation meets all program guidelines.

Criteria or specific requirement: The Public Housing Authority must inspect the unit leased to a family at least annually to determine if the unit meets Housing Quality Standards (HQS) and the Public Housing Authority must conduct quality control re-inspections. The Public Housing Authority must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). Condition: During our testing, we noted that the Commission failed to maintain documentation of a unit passing an HQS re-inspection in accordance with the above stated criteria. Questioned costs: None. Context: From a sample of eight (8) program participant files selected for testing, one file did not have documentation indicating that the deficiencies identified in the annual Housing Quality Standards inspection were found to be addressed and corrected during the re-inspection, and that the unit passed re-inspection. The sample was a statistically valid sample. Cause: The Commission did not retain documentation that the unit passed the HQS re-inspection. Effect: One program participant file did not contain passed HQS re-inspection documentation in accordance with the above criteria. If the deficiencies found as a result of the HQS inspections are not corrected, individuals may be living in unsafe home environments. Repeat Finding: No Recommendation: We recommend that management create an internal monitoring system to ensure that the Housing Quality Inspections are documented appropriately, the HQS documentation is appropriately included in the participant?s file, and the documentation meets all program guidelines.