BEMIDJI HOUSING AND REDEVELOPMENT AUTHORITYLocal Government

Federal Program Section 8 Housing Voucher Cluster 14.871 & 14.879 – Significant Deficiency Criteria The Authority must obtain and document in the family file third party verification of reported family annual income; the value of assets; expenses related to deductions from annual income; and other factors that affect the determination of adjusted income or income-based rent (24 CFR 982.516) Condition During our testing of 40 tenant files, we noted two files with income calculation errors and an additional file with the incorrect payment standard being used. Questioned Costs Undeterminable Context We reviewed a random sample of forty tenant files out of 291 for a tenant’s HAP amount. Effect The income verified was not appropriately used for determining the tenant’s income. Cause Management oversight and lack of internal controls in using checklists in files. Repeat Finding Not a repeat finding. Recommendation We recommend the Authority implement proper internal controls to ensure the Authority’s compliance, which could include the use of checklists in each file. Views of Responsible Officials The Authority is implementing a checklist and will continue random monthly file audits to be completed and documented by the Executive Director.

Federal Program Section 8 Housing Voucher Cluster 14.871 & 14.879 – Significant Deficiency Criteria Amounts paid under Section 8 Vouchers Program must meet the allowable costs/cost principles per HUD’s annual guidance. Condition During our testing of disbursements, we noted 5 instances of the Authority not having documentation to support an allocation of costs to the Vouchers program. Questioned Costs Undeterminable Context We reviewed a random sample of nine checks out of 89 from the Section 8 Vouchers Program. Effect The allocated costs to the Section 8 Vouchers Program were undeterminable due to the fact that no documentation to support the allocation was provided. Cause The Authority does not have formal approval/documentation of the allocation. Repeat Finding Not a repeat finding. Recommendation We recommend the Authority implement proper internal controls to ensure the Authority’s allocations are properly documented based on actual information and approved. Views of Responsible Officials The Authority will implement controls to make sure there is additional required documentation before any action for payment.

Criteria For units under HAP contracts that fail to meet HQS, the Authority must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspection and all other HQS deficiencies within 30 calendar days. If the owner does not correct the cited HQS deficiencies within specified correction period, the Authority must stop (abate) HAP payments beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. [24 CFR sections 982.158(d) and 982.404] Condition During our testing we noted one of seven tested instances where the Authority did not have adequate internal controls designed to ensure compliance with the HQS enforcement portion of special tests and provisions section of compliance requirements. A failed inspection was not followed up and corrected within the 30-day requirement. Cause Policies and procedures were not followed to ensure that HQS failed inspections were corrected timely. Effect Tenants could be living in housing that does not meet the minimum quality standards causing unallowable HAP payments. Repeat Finding No Recommendation We recommend the Authority track inspections and follow-ups to ensure they are done timely.

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Finding 2019-001 ? Housing Voucher Cluster, CFDA No. 14.871 ? Activities Allowed Condition Housing assistance payment funding was used to cover administrative fees. At year-end the amount restricted for housing assistance payments exceeded cash for the program by $940. Criteria Per the annual contribution contract (ACC), funds provided for housing assistance payments may not be used to cover administrative expenses. Effect Grant funds may be required to be repaid. Cause The Authority?s monthly calculation of restricted cash and equity was completed after the disbursements were issued. Repeat Finding No Recommendation The Authority should review the amount of restricted and unrestricted cash available prior to the issuance of disbursements. In addition, the Authority may need to find additional resources to cover shortfalls in administrative aid. Views of Responsible Official The Authority agrees with the finding.