ALPENA HOUSING COMMISSION

Material Weakness Finding 2023-004 (repeated from 12/31/2022) Statement of Condition: It was noted during the audit, capital funds had not been properly obligated or expended for the following capital grants: 2017 – not fully expended within 48 months of the funds becoming available 2018 – 90% not obligated within 24 months and not fully expended within 48 months of the funds becoming available 2019 – 90% not obligated within 24 months of the funds becoming available 2020 – 90% not obligated within 24 months of the funds becoming available 2021 – 90% not obligated within 24 months of the funds becoming available Criteria: H. PERIOD OF PERFORMANCE, N. SPECIAL TESTS AND PROVISIONS ITEM 3. OBLIGATION AND EXPENDITURE VERIFICATION: 24 CFR section 905.306 requires a PHA to obligate at least 90% of each Capital Fund grant within 24 months of the funds becoming available to the PHA for obligation and the PHA must expend 100% of each Capital Fund grant within 48 months of the funds becoming available. Perspective Information: The Commission did not have effective internal controls pertaining to the obligation and expenditure of capital grants. Questioned Costs: $218,104. Effect: The Commission is not in compliance with the period of performance and special tests and provisions, obligation and expenditure verification sections above. Cause: Lack of internal controls over capital grant requirements. Recommendation: The Commission should review the obligation and expenditure of capital grants on an ongoing basis and implement policies and procedures to ensure all federal compliances are followed pertaining to obligation and expenditures verification. Management’s Response: New Management has taken over as of March 2023 and will review and implement stronger policies and procedures pertaining to capital fund grants.

Material Weakness Finding 2023-005 (procurement portion repeated from 12/31/2022) Statement of Condition: Upon review of Capital Grant funds, it was noted the Commission did not obtain bids for construction projects completed utilizing capital grants. It was also noted the Commission did not verify contractors were not reported on the suspension and debarment list. Criteria: I. PROCUREMENT AND SUSPENSION AND DEBARMENT: 2 CFR section 200.317 outlines the procurements procedures to be followed in the administration of Capital Grant funds. 2 CFR section 180.220 states entities administering Capital Grant funds are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Perspective Information: The Commission did not have effective internal controls pertaining to procurement and suspension and debarment related to Capital Fund grants. Questioned Costs: None. Effect: The Commission is not in compliance with the procurement and suspension and debarment sections above. Cause: Lack of internal controls over capital grant requirements. Recommendation: The Commission should implement policies and procedures to ensure all federal compliances are followed pertaining to procurement and suspension and debarment. Management’s Response: New Management has taken over as of March 2023 and will review and implement stronger policies and procedures pertaining to capital fund grants.

Significant Deficiency Finding 2023-006 Statement of Condition: Upon review of invoices pertaining to Capital Grant funds it was noted the Commission did not verify the contractors procured for the building projects were in compliance with the Davis-Bacon Act. Criteria: N. SPECIAL TESTS AND PROVISIONS, 7. WAGE RATE REQUIREMENTS: 29 CFR part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction requires the Capital Grant fund recipients to verify that the contractor or subcontractor submitted the required certified payrolls. Perspective Information: The Commission did not have effective internal controls pertaining wage rate requirements related to Capital Fund grants. Questioned Costs: None. Effect: The Commission is not in compliance with the special tests and provisions, wage rate requirements sections above. Cause: Lack of internal controls over capital grant requirements. Recommendation: The Commission should implement policies and procedures to ensure all federal compliances are followed pertaining to wage rate requirements. Management’s Response: New Management has taken over as of March 2023 and will review and implement stronger policies and procedures pertaining to wage rate requirements.