FARGO HOUSING AND REDEVELOPMENT AUTHORITYLocal Government

Federal Program U.S. Department of Housing and Urban Development AL #14.850 – Significant Deficiency Federal Award Year 2023 Criteria The PHA must 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 sections 5.601 et seq., and 24 CFR sections 960.253, 960.255, and 960.259). Condition We tested compliance with the Authority’s eligibility in 40 tenant files and found that 3 TTP’s were incorrect due to the Authority calculating an incorrect rent payment. Questioned Costs None Context We reviewed a sample of 40 of the Authority’s 174 outstanding tenant files for eligibility requirements. Effect Tenants may not be paying the proper rent amount 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 there be a second party review of the file to ensure all calculations are correct and appropriate documents are included. Views of Responsible Officials The Authority recognizes the deficiency and plans to implement the auditor’s recommendation.

Federal Program U.S. Department of Housing and Urban Development AL #14.871 & 14.879 ? Significant Deficiency Grant Award No. ND014-Housing Choice Voucher & ND014 Mainstream Voucher Federal Award Year 2022 Criteria The PHA must inspect the unit leased to a family at least annually to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control re-inspections. The PHA must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). Condition We noted the Authority did not meet the minimum requirements for quality control re-inspections. The Authority had performed 16 out of the required 28 re-inspections. Questioned Costs None Context We reviewed the Authority?s documentation and noted 16 out of the required 28 quality control re-inspections were performed. Effect Inspected units may not have met Housing Quality Standards which could result in HAP payments being made for units that were not up to the Housing Quality Standards. Cause Additional units that did not house the Authority?s tenant were inspected and included as part of the required amount. Repeat Finding Not a repeat finding. Recommendation We recommend the Authority reviews quality control re-inspection standards to ensure compliance. Views of Responsible Officials The Authority is aware of the issue and has taken subsequent steps to ensure compliance with the requirement.

Federal Program U.S. Department of Housing and Urban Development AL #14.871 & 14.879 ? Significant Deficiency Grant Award No. ND014-Housing Choice Voucher & ND014 Mainstream Voucher Federal Award Year 2022 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 53 tenant files and found that two tenants did not have a rent reasonableness form for an increase in rent. The rent was deemed reasonable by the Authority once noted by the auditors. Questioned Costs None Context We reviewed a sample of 53 of the Authority?s 1,713 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 during the term of the HAP contracts, the tenant files did not contain forms comparing the rent of like-kind units. Repeat Finding See 2021-005. 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 #14.850 ? Significant Deficiency Criteria The Program requires the Authority to prepare an operating budget prior to the beginning of its fiscal year. The Authority?s Board of Commissioners is required to review and approve the budget by resolution. Condition We noted the Authority?s Board of Commissioners did not approve its operating budget prior to the beginning of the Authority?s fiscal year. Questioned Costs None Context We reviewed the current fiscal year?s operating budget and board minutes and resolutions. Effect Lack of timeliness in approval of operating budget leaves for potential misuse of program funds or tracking financial performance at the project level. Cause Turnover in staffing and lack of oversight. Repeat Finding See 2020-007. Recommendation We recommend the Authority reviews its procedures for maintaining a project-based budget and having it approved by Board resolution prior to the beginning of its fiscal year. Views of Responsible Officials The Authority is aware of the issue and has taken subsequent steps to ensure compliance with the requirement.

Federal Program U.S. Department of Housing and Urban Development AL #14.871 & 14.879 ? 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 two tenants did not have a rent reasonableness form for an increase in 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 1,620 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 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 documentations are included in the file.

Federal Program U.S. Department of Housing and Urban Development CFDA #14.871 & 14.879 ? Significant Deficiency Criteria The Program requires the Authority to submit the HUD Form 52681-B, The PHA submits this form monthly to HUD electronically via the VMS. Congress has instructed HUD to use VMS data to determine renewal funding levels. HUD also uses VMS data for other funding, monitoring, and SEMAP-related decisions. HUD relies on the audit of the key line items below to determine the reasonableness of the data submitted for the purposes of calculating funding under the program. Condition During our review of the Authority?s VMS Data Collection Report, it was noted that the November 2020 submission was not prepared accurately, causing housing assistance payments to be understated for the period. Questioned Costs None Context We noted the November 2020 VMS report was filed inaccurately and the Authority?s internal controls over reporting were ineffective. Effect Inaccurate VMS reports can result in improper federal funding. Cause Turnover in staffing and lack of oversight. Repeat Finding See 2019-006 Recommendation We recommend the Authority implement internal controls to ensure the VMS reports are accurately submitted in a timely manner. Views of Responsible Officials The Authority will review responsibilities pertaining to VMS reporting and ensure timely and appropriate VMS reporting.

Federal Program U.S. Department of Housing and Urban Development CFDA #14.850 ? Significant Deficiency Criteria The Authority?s internal control policy over eligibility under its Public and Indian Housing Program is to perform a quality control review over a sample of its tenant file population. Condition During our review of the Authority?s internal control policy over Public and Indian Housing tenant files, it was noted that the Authority did not perform its internal control review over tenant files during the year. Questioned Costs None Context We noted a quality control review was not performed during 2020. Effect If the tenants do not have independent evaluations performed, there leaves the potential for errors in determining eligibility for housing assistance. Cause Turnover in staffing and lack of oversight. Repeat Finding This is not a repeat finding. Recommendation We recommend the Authority follows its policy on performing a quality control review over a sample of its tenant file population on an annual basis. Views of Responsible Officials The Authority is aware of the issue and has taken subsequent steps to ensure compliance with the requirement.

Federal Program U.S. Department of Housing and Urban Development CFDA #14.850 ? Significant Deficiency Criteria The Authority?s adopted Admissions & Continued Occupancy Policy (ACOP) is established to ensure that only eligible families receive assistance and that no family pays more or less than its obligation under HUD regulations and FHRA policies. Condition During our review of 40 tenant files, we found two files that did not properly apply the Authority?s adopted minimum rent amount when calculating the total tenant payment (TTP) during the tenant?s recertification process. Questioned Costs None Context We sampled 40 tenants out of a total of 324 occupied units as part of our test work over eligibility. Effect Tenants may not be provided the proper housing assistance in accordance with their income and eligibility factors. Cause Turnover in staffing and lack of oversight. Repeat Finding This is not a repeat finding. Recommendation We recommend the Authority follows its policy in calculating and applying the proper assistance to its families enrolled in its Public and Indian Housing Program. Views of Responsible Officials The Authority is aware of the issue and has taken subsequent steps to ensure compliance with the requirement.

Federal Program U.S. Department of Housing and Urban Development CFDA #14.850 ? Significant Deficiency Criteria The Program requires the Authority to prepare an operating budget prior to the beginning of its fiscal year. The Authority?s Board of Commissioners is required to review and approve the budget by resolution. Condition We noted the Authority?s Board of Commissioners did not approve its operating budget prior to the beginning of the Authority?s fiscal year. Questioned Costs None Context We reviewed the current fiscal year?s operating budget and board minutes and resolutions. Effect Lack of timeliness in approval of operating budget leaves for potential misuse of program funds or tracking financial performance at the project level. Cause Turnover in staffing and lack of oversight. Repeat Finding This is not a repeat finding. Recommendation We recommend the Authority reviews its procedures for maintaining a project-based budget and having it approved by Board resolution prior to the beginning of its fiscal year. Views of Responsible Officials The Authority is aware of the issue and has taken subsequent steps to ensure compliance with the requirement.

Federal Program U.S. Department of Housing and Urban Development CFDA #14.850 ? Significant Deficiency Criteria The Authority must have written policies for admission of tenants. The Authority?s tenant selection policies must include requirements for applications and waiting lists, description of the policies for selection of applicants from the waiting lists, and policies for verification and documentation of information relevant to acceptance or rejections of an applicant (24 CFR sections 960.202 through 960.206). Condition We noted applicants were not properly sorted in accordance with the policies established in the Authority?s ACOP. Questioned Costs None Context We tested compliance with the Authority?s waiting list procedures by selecting one waiting list selection and testing 21 applicants from that list. Effect Several applicants were improperly sorted on the waiting list and could have received housing assistance at an earlier date. Cause Due to human error, the waiting lists were improperly sorted within the Authority?s tenant software system. Repeat Finding This is not a repeat finding. Recommendation We recommend the Authority review its procedures for selecting tenants and ensure all applicants are properly sorted prior to selections being made. Views of Responsible Officials The Authority is aware of the issue and has taken subsequent steps to ensure compliance with the requirement.

2019-005 Allowable Costs Federal Program U.S. Department of Housing and Urban Development CFDA #14.871 ? Significant Deficiency Criteria The Authority has a policy that requires approval of all disbursements and manual journal entries. Condition During our testing of disbursements, we noted 10 instances in which manual journal entries did not contain a formal approval for adjustment. Questioned Costs None Context We sampled a total of 40 disbursements paid out of the Voucher fund. Effect The disbursement?s without approval could potentially result in unallowable costs for the Voucher program. Cause Turnover in staffing and lack of oversight. Repeat Finding See 2018-007 Recommendation We recommend the Authority ensure proper approval of all disbursements prior to paying. Views of Responsible Officials The Authority will implement an approval process pertaining to manual journal entries.

2019-006 Reporting Federal Program U.S. Department of Housing and Urban Development CFDA #14.871 ? Significant Deficiency Criteria The Program requires the Authority to submit the HUD Form 52681-B, The PHA submits this form monthly to HUD electronically via the VMS. Congress has instructed HUD to use VMS data to determine renewal funding levels. HUD also uses VMS data for other funding, monitoring, and SEMAP-related decisions. HUD relies on the audit of the key line items below to determine the reasonableness of the data submitted for the purposes of calculating funding under the program. Condition The Authority had been required to re-submit VMS reports which resulted in adjustments to its restricted net position balance. Questioned Costs None Context We noted the VMS reports filed during 2019 were inaccurate and required adjustments. Effect Inaccurate VMS reports can result in improper federal funding. Cause Turnover in staffing and lack of oversight. Repeat Finding This is not a repeat finding Recommendation We recommend the Authority implement internal controls to ensure the VMS reports are accurately submitted in a timely manner. Views of Responsible Officials The Authority will review responsibilities pertaining to VMS reporting and ensure timely and appropriate VMS reporting.

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