Housing Authority of Crisfield

Reference Number: 2025-001 Federal Program: 14.872 – Public Housing Capital Fund Type of Finding: Noncompliance Repeat Finding: Yes – 2024-001 Criteria Public Housing Authorities are required to enter into depository agreements with their financial institutions using the HUD-519999 or a form required by HUD in the ACC. The agreements serve as safeguards for Federal funds a provide third-party rights to HUD. Condition The Authority could not provide depositor agreements with financial institutions holding Federal funds for the Authority. Questioned Costs None. Cause The Authority does not have depositor agreements with financial institutions holding Federal funds for the Authority. Effect The Authority should enter into depository agreements with all financial institutions holding Federal funds for the Authority. Recommendation The Authority should enter into depository agreements with all financial institutions holding Federal funds for the Authority. Management’s Response and Corrective Action Plan See schedule of corrective action plan.

Reference Number: 2024-001 Federal Program: 14.850 – Low Rent Public Housing Type of Finding: Noncompliance Repeat Finding: Yes – 2023-001 Criteria Public Housing Authorities are required to enter into depository agreements with their financial institutions using the HUD-519999 or a form required by HUD in the ACC. The agreements serve as safeguards for Federal funds a provide third-party rights to HUD. Condition The Authority could not provide depositor agreements with financial institutions holding Federal funds for the Authority. Questioned Costs None. Cause The Authority does not have depositor agreements with financial institutions holding Federal funds for the Authority. Effect The Authority should enter into depository agreements with all financial institutions holding Federal funds for the Authority. Recommendation The Authority should enter into depository agreements with all financial institutions holding Federal funds for the Authority. Management’s Response and Corrective Action Plan See schedule of corrective action plan.

Criteria Public Housing Authorities are required to enter into depository agreements with their financial institutions using the HUD-519999 or a form required by HUD in the ACC. The agreements serve as safeguards for Federal funds a provide third-party rights to HUD. Condition The Authority could not provide depositor agreements with financial institutions holding Federal funds for the Authority. Questioned Costs None. Cause The Authority does not have depositor agreements with financial institutions holding Federal funds for the Authority. Effect The Authority should enter into depository agreements with all financial institutions holding Federal funds for the Authority. Recommendation The Authority should enter into depository agreements with all financial institutions holding Federal funds for the Authority.

Criteria The Authority must maintain an adequate system of internal controls over financial reporting in order to initiate, authorize, record, process, and report financial data reliably in accordance with accounting principles generally accepted in the United States of America. Condition Financial information was not available timely to meet the reporting deadlines for the Data Collection Form and FDS submissions. Questioned Costs Unknown. Cause The Authority has not implemented the processes and controls over its finance function needed to prepare accurate and timely financial information that can be used for management decisions. Effect Accurate financial information was not available to make management decisions. Additionally, this resulted in a delay in completing the audit. Recommendation The Authority must implement processes and controls to ensure accurate interim and year-end financial statements. Adequate and accurate financial information is vital to make management decisions that impact the Authority. This information must be shared timely and discussed to make the necessary changes that are needed and to prepare the proper cash flow projections.

Criteria It is the auditee’s responsibility to ensure that the Data Collection Form and Financial Data Schedule (FDS) are submitted timely and accurately. The due date for the data collection form is the earlier of 30 days after receipt of the audit report or nine months after the Authority’s yearend, and the due date for the FDS submission is nine months after the Authority’s year-end. Condition The Data Collection Form for the year ended March 31, 2021, was due for submission to the Federal Audit Clearing House by December 31, 2021 (nine months after the Authority year-end) and was not submitted by that date. Additionally, the FDS submission for the year ended March 31, 2021 was due for submission to HUD by the extended deadline of June 30, 2022 and was not submitted by that date. Questioned Costs None. Cause The Authority has not implemented the processes and controls over its finance function needed to prepare accurate and timely financial information that can be used to complete the Data Collection Form and FDS. Effect Because of the late submission of the audit reports, the reporting package and FDS was not made available to users in a timely manner. Recommendation We recommended that the Authority develop procedures to ensure that future reporting packages and FDS reports are submitted by the respective deadlines.

Criteria Public Housing Authorities are required to enter into depository agreements with their financial institutions using the HUD-519999 or a form required by HDU in the ACC. The agreements serve as safeguards for Federal funds a provide third-party rights to HUD. Condition The Authority could not provide depositor agreements with financial institutions holding Federal funds for the Authority. Questioned Costs None. Cause The Authority does not have depositor agreements with financial institutions holding Federal funds for the Authority. Effect The Authority should enter into depository agreements with all financial institutions holding Federal funds for the Authority. Recommendation The Authority should enter into depository agreements with all financial institutions holding Federal funds for the Authority.

Finding 2020-002 ? Allowable Costs (Significant Deficiency) Low Rent Public Housing ? CFDA 14.850; Grant period ? Year ended March 31, 2020 Criteria: The Code of Federal Regulations and HUD guidelines give the requirements for costs necessary and reasonable for the performance of the Federal award and allocable under the principles of 2 CFR part 200, subpart E. Specifically, HUD regulations CFR Parts 200.400 requires costs to be necessary and reasonable for the performance of the Federal award, conform to any limitation or exclusions as set forth in the Federal award as to types and amount of cost items, and be adequately documented. Also, the Authority?s policy and procedure dictates full compliance with these regulations, as well as guidelines to be followed in determining allowable costs. Condition & Cause: In a test of disbursements for compliance with expenditures of federal awards we found instances of noncompliance in payments of employee medical reimbursement costs. 1. Five Reimbursements included payments for non-employee medical expenses. 2.Two reimbursements had no evidence of manager approval prior to payment. 3.Three original invoices were not provided. Payment was made from billing statement and it could not be determined if the expense was allowable Statement of Effect: The Authority is not in compliance with HUD eligibility requirements outlined in CFR parts 200.400. All instances listed above were the result of controls not operating effectively to ensure costs are necessary, and reasonable for the performance of the Federal award and adequately documented. This lack of controls could lead to a misuse of Federal funds. Questioned Costs ? $6,215 Recommendation: We recommend management obtain a better understanding of what costs are allowable by the Federal Code of Regulations and HUD. We also recommend the Authority maintain adequate documentation for all expenditures of Federal awards. Reply: All of the noncompliance issues were related to the Authority?s medical reimbursement plan. The Authority is no longer participating in the plan. Per Don Bibb, Executive Director, the issues that lead to this finding have been corrected as of the date of the audit report.

Finding 2020-003 ? Public Housing Tenant Files (Material Weakness) Low Rent Public Housing ? CFDA 14.850; Grant period ? Year ended March 31, 2020 Criteria: The Code of Federal Regulations and HUD guidelines give the requirements for maintaining the tenant files for the Public Housing and Housing Choice programs. Specifically, HUD regulations CFR Parts 960.201 requires Authorities to comply with HUD-prescribed reporting requirements that will permit HUD to maintain data necessary to monitor compliance with income eligibility. Additionally, the Uniform Financial Reporting Standards (24 CFR section 5.233) mandate the use of HUD's Enterprise Income Verification (EIV) System. The EIV system is a web-based application which provides owners with employment, wage, unemployment compensation and Social Security benefit information for tenants participating in HUD's assisted housing programs. Also, the Authority?s policy and procedure dictates full compliance with these regulations, as well as guidelines to be followed in maintaining these files. Condition & Cause: A current year review of 40 tenant files revealed a situation of continued errors and omissions in most of the files that leads to incomplete tenant documentation. The most significant results of the review are as follows: 1. Of the 40 tenant files requested, 2 did not have signed applications. 2. Of the 40 tenant files reviewed, 6 did not contain third party income verification. 3. Of the 40 tenant files reviewed, 2 did not have reexams on an annual basis 4. Of the 40 tenant files reviewed, 4 did not correctly compute tenant rent based on annual income. 5. Of the 40 tenant files reviewed, 40 did not contain a community service requirement form. 6. Of the 40 tenant files reviewed, 1 did not contain a birth certificate or state issued ID 7. Of the 40 tenant files reviewed, 8 did not fully comply with the mandated use of the Enterprise Income Verification (EIV) System income before or during a family reexamination. 8. Of the 40 tenant files reviewed, 1 did not maintain a copy of the applicable HUD-50058 form for auditor review. Statement of Effect: The Authority is not in compliance with HUD eligibility requirements outlined in 24 CFR section 5.233. All instances listed above were the result of controls not operating effectively to ensure tenant files contain all the documentation required to determine eligibility. This lack of controls could lead to erroneous rent calculations, housing unqualified persons and unsafe living standards from lack of inspections. Questioned Costs ? Not determinable Recommendation: We recommend that the Authority utilize a standard filing system based upon a checklist and issue this to all required personnel. We recommend that supervisors and managers review on a monthly basis a random sample of all files to determine compliance with federal guidelines and the Authority?s policy. Reply: The Authority has made staffing changes at the management level and is in the process of strengthening its internal controls. The staffing changes and additional internal controls will correct the failure to meet federal guidelines and the Authority?s policy. Don Bibb, Executive Director, expects the deficiencies which led to this finding to be cleared in fiscal year 2022.

Finding 2020-004 ? Public Housing Depository Agreements Low Rent Public Housing ? CFDA 14.850; Grant period ? Year ended March 31, 2020 Criteria: Public Housing Authorities are required to enter into depository agreements with their financial institutions using the HUD-519999 or a form required by HDU in the ACC. The agreements serve as safeguards for Federal funds an provide third-party rights to HUD. Condition & Cause: The Authority could not provide depositor agreements with financial institutions holding Federal funds for the Authority. Statement of Effect: The Authority is not in compliance with HUD requirements and HUD may not have third party rights to the Federal fund. Questioned Costs ? Not determinable Recommendation: We recommend that the Authority enter into depository agreements with all financial institutions holding Federal funds for the Authority. Reply: Don Bibb, Executive Director, is working with the financial institutions to ensure the Authority has depository agreements with all banks holding Federal funds for the Authority.

Significant Deficiency 19-001 Information on the Federal Program ? CFDA 14-850 ? Public Indian and Housing Program, U.S. Department of Housing and Urban Development. Compliance Requirements: Activities Allowable and Unallowable. Type of Finding: Significant Deficiency. Criteria ? Controls should be in place so that federal funds are not used to pay for expenses which are not allowable under HUD requirements. Condition ? In our compliance testing related to expenses paid by the Housing Authority of Crisfield using federal funds, two expenses in our sample involved paying for medical reimbursements of spouses and/or family members of employees of the Housing Authority of Crisfield. Cause ? Management does not have sufficient knowledge of which costs are not allowable under HUD programs. Effect ? There is a danger that the Housing Authority of Crisfield will use federal funds to pay for expenses which are not allowable under HUD requirements. Recommendation ? We recommend that the management of the Housing Authority of Crisfield obtain a better understanding of what costs are allowable under HUD requirements to avoid expending federal funds for any activities deemed to be not allowable in the future. Responsible Official?s Response and Planned Corrective Action ? Management acknowledges the condition and going forward will seek to obtain a better understanding of allowable costs as outlined by HUD. Management has noted and will discontinue immediately medical reimbursements for amounts incurred on behalf of family members of employees. Planned Implementation Date of Corrective Action ? July 1, 2019. Person Responsible for Corrective Action ? Executive Director