Housing Authority of the City of Sheboygan

2024-001 – Lack of Segregation of Duties Criteria: Internal control is a process, affected by the Housing Authority of the City of Sheboygan's (the Authority) board of commissioners, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. A good system of internal control provides for an adequate segregation of duties so that no one individual handles a transaction from its inception to completion. Condition: Due to the limited employees and resources available to the Authority, many aspects of the internal control structure that rely on segregation of duties are missing. Specific accounting processes noted that are affected by the lack of segregation of duties include: cash disbursements, payroll disbursements, cash receipting, and specific reporting functions required for the Authority. Cause: Due to the limited number of personnel within the Authority, segregation of the accounting functions necessary to ensure adequate internal accounting control is not possible. This is not unusual in operations the size of the Authority; however, management should constantly be aware of this condition and realize that the concentration of duties and responsibilities in a limited number of individuals is not desirable from an accounting point of view. Effect: Inadequate segregation of duties could adversely affect the Authority’s ability to detect misstatements in amounts that would be material in relation to the financial statements in a timely period by personnel in the normal course of performing their assigned functions. Recommendation: We recommend that the Authority’s board of commissioners and management be aware of the lack of segregation of the accounting functions and, where possible, implement oversight procedures to ensure the internal control policies and procedures are being implemented by personnel to the extent possible. View of Responsible Officials: Management agrees with the finding.

FINDING NO. CONTROL DEFICIENCIES 2023-001 Eligibility Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Housing Choice Voucher Cluster FAL Number: 14.871 Award Period: January 1, 2023 through December 31, 2023 Compliance Requirement: Eligibility Type of Finding: Internal Control and Compliance, Significant Deficiency Criteria: The Authority is required to have documents from the tenant to provide necessary information/documentation, third party verification of asset valuations, release of information documentation, and income eligibility and calculations of tenants rent from asset/income documentation. The Authority is required to determine eligibility at least annually or if the tenant's income changes during the year. Condition: As part of our testing, we found three tenant files that were missing income verification documentation in the tenant files to verify that the tenant was eligible and HAP and that the rent amount was properly calculated. Questioned Costs: Not determined Cause: The Authority did not perform review procedures properly designed to ensure that all the documentation was in the tenant's file to determine if they were eligible and that the tenant rent/HAP payment was correct. Effect: HAP payments to landlords could be improperly calculated and tenants not eligible could be included in the program. Repeat Finding: No Recommendation: We recommend the Authority to update their internal control policies to require a review of the tenant files from another qualified personel or have a checklist to be filled out in a timely manner when checking eligibility/HAP amounts to landlords. Views of responsible officials: There is no disagreements with audit finding

FINDING NO. 2019-001. UNIFORM GUIDANCE CONTROL DEFICIENCES HQS INSPECTIONS AND HAP ABATEMENT. 14.871 - HOUSING CHOICE VOUCHERS. COMPLIANCE REQUIREMENT: SPECIAL TESTS AND PROVISIONS. CONDITION: AS PART OF OUR REVIEW OF FAILED HQS INSPECTIONS, WE FOUND THAT ONE OF THE FAILED INSPECTIONS DID NOT PASS THE RE-INSPECTION PROCESS WITHIN 30 DAYS FOR A NON-LIFE THREATENING DEFICIENCY AND HAP WAS NOT ABATED AS REQUIRED. CRITERIA: THE AUTHORITY IS REQUIRED TO CORRECT ANY HQS DEFICIENCIES WITHIN 30 CALENDAR DAYS UNLESS THERE WAS AN APPROVED EXTENSION. IF THE OWNER DOES NOT CORRECT THE CITED HQS DEFICIENCIES WITHIN THE SPECIFIED CORRECTION PERIOD, THE AUTHORITY MUST STOP (ABATE) HAPS BEGINNING NO LATER THAN THE FIRST OF THE MONTH FOLLOWING THE SPECIFIC CORRECTION PERIOD OR MUST TERMINATE THE HAP CONTRACT. CAUSE: THE AUTHORITY RARELY HAS FAILED INSPECTIONS AND WANTED TO MAINTAIN GOOD RELATIONSHIPS WITH THEIR LANDLORDS SO DID NOT PROPERLY ABATE THE HAP PAYMENTS AS REQUIRED. EFFECT: HAP COULD BE PAID TO A LANDLORD WHEN THE UNIT DOES NOT MEET HOUSING QUALITY STANDARDS. QUESTIONS COSTS: NOT DETERMINED. RECOMMENDATION: WE RECOMMEND THAT THE AUTHORITY UPDATE THEIR INTERNAL CONTROL POLICIES SO THAT HAP IS PROPERLY ABATED WHEN FAILED HQS INSPECTIONS DO NOT PASS WITHIN THE REQUIRED SPECIFIED CORRECTION PERIOD.

FINDING NO. 2019-002. UNIFORM GUIDANCE CONTROL DEFICIENCES SELECTION FROM THE WAITING LIST. 14.871 - HOUSING CHOICE VOUCHERS. COMPLIANCE REQUIREMENT: SPECIAL TESTS AND PROVISIONS. CONDITION: AS PART OF OUR REVIEW OF WAITLIST SELECTION PROCESS, WE FOUND THAT THE AUTHORITY DID NOT HAVE A GOOD PROCESS IN PLACE TO TRACK WAITLIST APPLICANTS. SEVERAL APPLICATIONS WERE LOST AND APPLICANTS WERE NOT SELECTED IN ACCORDANCE WITH THE PHA'S POLICY. CRITERIA: THE AUTHORITY IS REQUIRED TO FOLLOW ITS WRITTEN POLICIES IN ITS ADMINISTRATIVE PLAN FOR SELECTING APPLICANTS FROM THE WAITING LIST AND THE AUTHORITY'S DOCUMENTATION MUST SHOW THAT THE AUTHORITY FOLLOWED THESE POLICIES. CAUSE: THE AUTHORITY PREVIOUSLY TRACKED THEIR WAITLIST VIA PAPER APPLICATIONS. THE AUTHORITY WOULD PULL APPLICANTS ON A FIRST-IN, FIRST-OUT BASIS WITHOUT TAKING PREFERENCES OR PRIORITY INTO CONSIDERATION WHICH GOES AGAINST THEIR POLICY. THE AUTHORITY ALSO LOST SEVERAL APPLICATIONS AND DID NOT NOTICE UNTIL THE APPLICANT INQUIRED ABOUT THE STATUS. EFFECT: APPLICANTS ARE PULLED OFF THE WAITLIST IN THE WRONG ORDER OR APPLICATIONS COULD BE LOST. QUESTIONS COSTS: NOT DETERMINED. RECOMMENDATION: WE RECOMMEND THAT THE AUTHORITY UPDATE THEIR INTERNAL CONTROL POLICIES SO THAT THERE IS A BETTER PROCESS FOR TRACKING THE WAITLIST. WE RECOMMEND USING AN ELECTRONIC PROCESS IF THEIR SYSTEM ALLOWS IT. WE ALSO RECOMMEND THAT THE AUTHORITY KEEPS A COPY OF THE WAITLIST BEFORE PULLING APPLICANTS SO THEY CAN DOCUMENT THE SELECTION PROCESS WAS BASED ON THE AUTHORITY'S ADMINISTRATIVE PLAN.

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