Highland Area Non-Profit Housing Corporation

2024-002 – Eligibility Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Eligibility) Federal program U.S. Department of Housing and Urban Development · Section 8 Housing Assistance Payments (ALN# 14.195) Criteria. Under Section 8 of the National Housing Act of 1959, project management is required to ensure that during a fiscal year at least 40% of the units that become available, together with initial certifications of in-place tenants, serve extremely low-income families. If the Project has actively marketed available units to extremely low-income families and has been unable to achieve the 40% target for admissions and initial certifications, the Project is permitted to rent to other eligible families after a reasonable marketing period has expired. Condition. Less than 40% of tenants who moved into the property during the year met the extremely-low income threshold and management did not maintain records of marketing efforts targeted to extremely low-income families, demonstrating that reasonable efforts were made to fill available units accordingly and that such efforts are ongoing. Cause. Management does not appear to have sufficient internal control procedures in place to properly implement all of HUD's program requirements. Effect. As a result of this condition, the Project failed to meet the prescribed income targeting requirements and documentation of marketing efforts to reach the target population. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management revisit their current policies and procedures surrounding tenant acceptance and marketing efforts to ensure compliance with HUD policies. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

2023-001 – Timely Payment of Mortgage Balance Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development ·   Supportive Housing for the Elderly (ALN# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for making timely payments to its mortgage payable, which is insured by HUD. Condition. Out of 12 monthly payments on the Project's HUD insured mortgage payable, that are due each fiscal year, 1 payment was late, resulting in a late fee. Cause. Management does not appear to have sufficient internal control procedures in place to properly implement all of HUD's program requirements. Effect. As a result of this condition, the mortgage was not paid on time. While there was ultimately payment of the delinquent monthly balance, the lack of effective internal controls could lead to future significant noncompliance. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management should strengthen their current policies and follow a documented process for ensuring that monthly mortgage payments are made timely. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

2020-001 ? Vendor Suspension/Debarment Search (repeat) Finding Type. Immaterial noncompliance; Significant deficiency in internal controls over compliance (Procurement, Suspension, and Debarment) Federal programs U.S. Department of Housing and Urban Development ? Supportive Housing for the Elderly (CFDA# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959 Project management is responsible for determining whether a contractor engaged for services over $25,000 has been suspended or debarred by the federal government as noted at sam.gov. Condition. Project management did not perform a search for suspended or debarred vendors during the year. Cause. Duties and responsibilities for certain office personnel were recently reassigned. As a result of not having a written policy regarding suspension and debarment, the procedure of searching certain vendors at sam.gov was overlooked. Effect. As a result of this condition, potentially suspended or debarred vendors would not have been identified in a timely manner. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management develop and implement a process to check potential vendors in the sam.gov database prior to acceptance or renewal of a contract for each year that the amount is expected to exceed the $25,000 threshold. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

2019-002 ? Vendor Suspension/Debarment Search (repeat) Finding Type. Immaterial noncompliance; Significant deficiency in internal controls over compliance (Procurement, Suspension, and Debarment) Federal programs U.S. Department of Housing and Urban Development Supportive Housing for the Elderly (CFDA# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959 Project management is responsible for determining whether a contractor engaged for services over $25,000 has been suspended or debarred by the federal government as noted at sam.gov. Condition. Project management did not perform a search for suspended or debarred vendors during the year. Cause. Duties and responsibilities for certain office personnel were recently reassigned. As a result of not having a written policy regarding suspension and debarment, the procedure of searching certain vendors at sam.gov was overlooked. Effect. As a result of this condition, potentially suspended or debarred vendors would not have been identified in a timely manner. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management develop and implement a process to check potential vendors in the sam.gov database prior to acceptance or renewal of a contract for each year that the amount is expected to exceed the $25,000 threshold. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

2019-003 ? Allowable Costs/Cost Principles ? Proper Approval of Purchases Finding Type. Immaterial noncompliance; Significant deficiency in internal controls over compliance (Allowable Costs / Cost Principles) Federal programs U.S. Department of Housing and Urban Development Supportive Housing for the Elderly (CFDA# 14.157) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for approving, correctly classifying, and determining allowability of costs prior to disbursement. Condition. We noted 1 instance out of 40 in which an invoice was not approved in accordance with policy. Cause. Management has not properly implemented internal control procedures to ensure invoices are properly authorized prior to approval and payment for services rendered. Effect. As a result of this condition, unallowable costs could potentially have been incurred due to the failure to obtain proper review and approval of the underlying invoice. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management properly follow existing procedures and controls in place to ensure that invoice approvals take place prior to making disbursements. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.

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