HOUSING AUTHORITY OF CASS COUNTYLocal Government

Federal Program U.S. Department of Housing and Urban Development AL #14.871 and 14.879 – Significant Deficiency. Criteria For units under HAP contract that fail to meet HQS, the PHA must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA must stop (abate) HAPs 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 We tested compliance with the Authority’s HQS Enforcement on 9 failed inspections and noted two failed inspections with life-threatening deficiencies that were identified and reported to respective landlords and tenants were not corrected within the required 24 hours and HAP was not abated. Questioned Costs None. Context We reviewed a sample of 9 of the Authority’s 82 failed inspections during 2024 for HQS Enforcement requirements. Effect HAP payments could be paid to a tenant where they should not be due to insufficient clearing of HQS inspection deficiencies. Cause Lack of oversight and control procedures. Repeat Finding Yes Recommendation We recommend the Authority review their procedures for tracking failed inspections to ensure that all failed inspections are being followed up and cleared within the required timeframe. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

Federal Program U.S. Department of Housing and Urban Development AL #14.871 – Significant Deficiency. Criteria Determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification in accordance with 24 CFR Part 5 Subpart F (24 CFR section 5.601 et seq.) (24 CFR sections 982.201, 982.515, and 982.516). Additionally, as a condition of admission or continued occupancy, the Authority 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 982.516). Condition We tested compliance with the Authority’s eligibility in 40 tenant files and found that one tenant’s housing assistance payment was calculated incorrectly resulting in an incorrect HAP amount paid. Additionally, we noted one tenant file in which proof of citizenship was not maintained and two tenant files that did not have a signed lease agreement by the required parties. Questioned Costs None. Context We reviewed a sample of 40 of the Authority’s 491 tenant files for eligibility requirements. Effect HAP payments could have been paid to a tenant who was not eligible to receive the payments or tenants may not be provided the proper housing assistance in accordance with their income and eligibility factors. Cause Lack of controls and oversight during the year. Repeat Finding 2022-007 Recommendation We recommend the Authority reviews their procedures of tenant file reviews to ensure all calculations are correct and appropriate documents are included. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

Federal Program U.S. Department of Housing and Urban Development AL #14.871 – Significant Deficiency. Criteria The Uniform Guidance requires all entities that expend in excess of $750,000 to file audited financial statements and a Data Collection Form within 9 months of year-end. Condition The Authority’s December 31, 2023 audited financial statements and associated Data Collection Form were not filed with the Federal Audit Clearinghouse within 9 months of the Authority’s year-end. Questioned Costs None. Context N/A Effect The Authority is not in compliance with Uniform Guidance requirements. Cause The financial statements were not completed within the 9-month window which delayed the submissions to the Federal Audit Clearinghouse. Repeat Finding See 2022-008. Recommendation We recommend the Authority ensures reconciliations are prepared in a timely manner to allow for an efficient audit process. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

Federal Program U.S. Department of Housing and Urban Development AL #14.871 – Significant Deficiency. Criteria The PHA must inspect the unit leased to a family at least biennially to determine if the unit meets Housing Quality Standards (HQS) (24 CFR section 982.405(b)). Condition We tested compliance with the Authority’s HQS in 40 tenant files and found one instance in which a biennial inspection had not been performed. Questioned Costs None. Context We reviewed a sample of 40 of the Authority’s 491 tenant files for HQS Inspection requirements. Effect HAP payments may be made to a tenant living in a unit that does not meet Housing Quality Standards. Cause Lack of oversight and control procedures. Repeat Finding Not a repeat finding. Recommendation We recommend the Authority reviews their control procedures over HQS Inspections to ensure that inspections are being performed as required. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

Federal Program U.S. Department of Housing and Urban Development AL #14.871 – Significant Deficiency. Criteria For units under HAP contract that fail to meet HQS, the PHA must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the PHA must stop (abate) HAPs 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 We tested compliance with the Authority’s HQS Enforcement on 12 failed inspections and noted one failed inspection was not followed-up on and HAP was not abated. During our testing of 40 tenant files, we also noted two instances of failed inspections that were not followed-up on and HAP was not abated. Questioned Costs None. Context We reviewed a sample of 12 of the Authority’s 120 failed inspections during 2023 for HQS Enforcement requirements. Effect HAP payments could be paid to a tenant where they should not be due to insufficient clearing of HQS inspection deficiencies. Cause Lack of oversight and control procedures. Repeat Finding Not a repeat finding. Recommendation We recommend the Authority review their procedures for tracking failed inspections to ensure that all failed inspections are being followed-up and cleared within the required timeframe. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

Federal Program: U.S. Department of Housing and Urban Development AL #14.871 - Material Weakness. Criteria: The Authority is required to have procedures in place to ensure that federal awards are in accordance with 2 CFR Part 200. Appendix XI. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition: The Authority was unable to provide one of the 40 selected tenant files for testing of compliance. As a result, we were unable to perform compliance testing to ensure the entity was in compliance for all compliance categories mentioned above. Questioned Costs: None. Context: We are unable to test one of the 40 selected tenant files. Effect: The Authority is not in compliance with Uniform Guidance requirements. Cause: The Authority suffered flooding, which resulted in tenant files becoming damaged and thrown out. Repeat Finding: Not a repeat finding. Recommendation: We recommend that management stores tenant files in a safe location, in storage that will protect it from flood, fire, or other damage. Views of Responsible Officials: Management recognizes the deficiency and has made modifications to the storage area for tenant files to ensure safe storage protected from fire, flood, or other damage.

Federal Program: U.S. Department of Housing and Urban Development AL #14.871 - Significant Deficiency. Criteria: Per the Authority's policy, all tenant files are required to have a quality control worksheet included, which functions as the Authority's primary internal review process to ensure an annual certification, at minimum, was performed and appropriate tenant information is documented. Condition: Of the 40 tenant files selected for testing, we noted four files in which the quality control worksheet was never completed. Questioned Costs: None. Context: We reviewed a sample of 40 of the Authority's 472 tenant files for eligibility requirements. Effect: Tenants may not be provided the proper housing assistance in accordance with their income and eligibility factors. Cause: Lack of controls and oversight during the year. Repeat Finding: Not a repeat finding. Recommendation: We recommend the Authority follow its policy and emphasize performing a quality review over its tenant files to ensure all income and eligibility factors are properly determined. Views of Responsible Officials: Management has implemented a process for file review and quality control independent of a quality control worksheet. We are confident that all files are being reviewed, regardless of the presence of the worksheet. We have reiterated the importance of completing the worksheet when QC reviews are completed.

Federal Program: U.S. Department of Housing and Urban Development AL #14.871 - Significant Deficiency. Criteria: Determine income eligibility and calculate the tenant's rent payment using the documentation from third party verification in accordance with 24 CFR Part 5 Subpart F (24 CFR section 5.601 et seq.) (24 CFR sections 982.201, 982.515, and 982.516). Additionally, as a condition of admission or continued occupancy, the Authority 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 982.516). Condition: We tested compliance with the Authority's eligibility in 40 tenant files and found that one tenant's housing assistance payment was understated due to the Authority using an incorrect rent payment. Additionally, we noted one tenant file in which the tenant's Social Security Number was not documented. Questioned Costs: None. Context: We reviewed a sample of 40 of the Authority's 472 tenant files for eligibility requirements. Effect: During our review of tenant files, one tenant's verified income was incorrectly calculated and entered into the rent determination worksheet, resulting in the tenant's rent and HAP portion to be miscalculated. The error noted remained undetected after completion of a quality control worksheet, which functions as the Authority's primary internal review process to ensure an annual certification, at minimum, was performed and appropriate tenant information is documented. Additionally, HAP payments could have been paid to a tenant who was not eligible to receive the payments. Cause: Lack of controls and oversight during the year. Repeat Finding: Not a repeat finding. Recommendation: We recommend there be a second party review of the file to ensure all calculations are correct and appropriate documents are included. Views of Responsible Officials: Management recognizes the deficiency and plans to implement the auditor's recommendation.

Federal Program: U.S. Department of Housing and Urban Development AL #14.871 - Significant Deficiency. Criteria: The Uniform Guidance requires all entities that expend in excess of $750,000 to file audited financial statements and a Data Collection Form within 9 months of year-end. Condition: The Authority's December 31, 2022 audited financial statements and associated Data Collection Form were not filed with the Federal Audit Clearinghouse within 9 months of the Authority's year-end. Questioned Costs: None. Context: N/A. Effect: The Authority is not in compliance with Uniform Guidance requirements. Cause: The financial statements were not completed within the 9-month window which delayed the submissions to the Federal Audit Clearinghouse. Repeat Finding: See 2021-007. Recommendation: We recommend the Authority ensures reconciliations are prepared in a timely manner to allow for an efficient audit process. Views of Responsible Officials: Management recognizes the deficiency and plans to implement the auditor's recommendation.

Federal Program: U.S. Department of Housing and Urban Development AL #14.871 - Significant Deficiency. Criteria: The Authority must maintain records to document the basis for the determination that rent to owner is reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: We tested compliance with the Authority's rent reasonableness forms in 40 tenant files and found that two tenants did not have a rent reasonableness form for the current cost of rent. The rent was deemed reasonable by the Authority once noted by the auditors. The error noted remained undetected after completion of a quality control worksheet, which functions as the Authority's primary internal review process to ensure an annual certification, at minimum, was performed and appropriate tenant information is documented. Questioned Costs: None. Context: We reviewed a sample of 40 of the Authority's 472 tenant files for rent reasonableness requirements. Effect: HAP payments could have been paid to a tenant where rent was not considered reasonable. Cause: Upon change in rent or move-in to a new property during the term of the HAP contracts, the tenant files did not contain forms comparing the rent of like-kind units. Repeat Finding: See 2021-008. Recommendation: We recommend there be a second party review of the file to ensure all appropriate documents are included. Views of Responsible Officials: The Authority will have a checklist on annual certifications to ensure all appropriate documents are included in the file.

Federal Program U.S. Department of Housing and Urban Development AL #14.871 – Material Weakness Criteria The Authority is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition We reconciled the SEFA and noted that the Authority did not have sufficient expenditures to cover COVID funds. It was noted the program funds were used incorrectly across other programs within the Authority. Questioned Costs $52,450 Context We reconciled the SEFA, noting there were not sufficient expenditures within the HCV fund to cover COVID funds. Effect The control deficiency led to the Authority receiving more COVID funds than what they were entitled to receive. Cause We note a lack of understanding of grant requirements by management of the Authority. Repeat Finding Not a repeat finding. Recommendation We recommend that management reviews grant requirements to ensure they have proper expenditures to cover funds received in the future. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

Federal Program U.S. Department of Housing and Urban Development AL #14.871 – Significant Deficiency Criteria The Authority must reexamine family income at least once every 12 months and obtain and document third party verification (24 CFR section 982.516). Condition We tested compliance with the Authority’s eligibility in 40 tenant files and found that one tenant did not have a reexamination of all income done within the 12 months and no third party verification was performed on that income. We also noted one tenant did not have a signed lease agreement within the file. Questioned Costs None Context We reviewed a sample of 40 of the Authority’s 436 tenant files for eligibility requirements. Effect HAP payments could have been paid to a tenant who was not eligible to receive the payments. Cause The Authority failed to reexamine family income every 12 months and obtain third party verification for all income. Repeat Finding Not a repeat finding. Recommendation We recommend there be a second party review of the file to ensure all necessary procedures have been performed and appropriate documents are included. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

Federal Program U.S. Department of Housing and Urban Development AL #14.871 – Significant Deficiency Criteria The Uniform Guidance requires all entities that expend in excess of $750,000 to file audited financial statements within 9 months of year-end. Condition The Authority’s December 31, 2021 audited financial statements were not filed with the Federal Audit Clearinghouse within 9 months of the Authority’s year-end. Questioned Costs None Context N/A Effect The Authority is not in compliance with Uniform Guidance requirements. Cause The financial statements were not completed within the 9-month window which delayed the submission to the Federal Audit Clearinghouse. Repeat Finding Not a repeat finding. Recommendation We recommend the Authority ensures reconciliations are prepared in a timely manner to allow for an efficient audit process. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

Federal Program U.S. Department of Housing and Urban Development AL #14.871 – Significant Deficiency Criteria The Authority must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition We tested compliance with the Authority’s rent reasonableness forms in 40 tenant files and found that three tenants did not have a rent reasonableness form for the current cost of rent. The rent was deemed reasonable by the Authority once noted by the auditors. Questioned Costs None Context We reviewed a sample of 40 of the Authority’s 436 tenant files for rent reasonableness requirements. Effect HAP payments could have been paid to a tenant where rent was not considered reasonable. Cause Upon change in rent or move-in to a new property during the term of the HAP contracts, the tenant files did not contain forms comparing the rent of like-kind units. Repeat Finding Not a repeat finding. Recommendation We recommend there be a second party review of the file to ensure all appropriate documents are included. Views of Responsible Officials The Authority will have a checklist on annual certifications to ensure all appropriate documents are included in the file.

Federal Program U.S. Department of Housing and Urban Development AL #14.871 – Significant Deficiency Criteria The Authority must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days. 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 specified correction period or must terminate the HAP contract. Condition We tested compliance with the Authority’s HQS Enforcement on 3 failed inspections and found that one failed inspection was not re-inspected for corrections timely and HAP payment was not abated. The Authority performed a re-inspection and issued a pass once noted by the auditors. Questioned Costs None Context We reviewed a sample of 3 of the Authority’s 21 failed inspections to note a re-inspection and subsequent pass. Effect Tenants could be living in a unit that is not fit for living, or not up to standard with the lease agreement terms. Cause The failed inspection was not followed up on within a reasonable time to ensure that the failed items were corrected. Repeat Finding Not a repeat finding. Recommendation We recommend implementing a review process that occurs within the required timeframe for inspections to be followed up by to ensure the failed inspections are appropriately taken care of. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.

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