City of ConcordLocal Government

Material Weakness, Eligibility. Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that applicants have all required documentation in their file. In accordance with 24 CFR Part 5 Subpart F, the City must maintain documentation to support tenant eligibility. Condition: The City did not follow procedures to ensure the proper eligibility determinations were made and documented. Context: Of the 6,168 housing assistance payments during the current year valued at $5,286,995, we examined 60 (valued at $54,964) and determined that 6 (10% valued at $5,441) applicants did not have properly calculated resources. Upon further review and recalculation, the six applicants were deemed eligible. Effect: Participants could receive benefits for which they are not eligible. Cause: Weakness in implementation of controls over eligibility procedures. Questioned Cost: None. This finding represents an internal control issue; therefore, questioned costs are not applicable. Recommendation: Tenant files should be reviewed to verify that calculations are accurate, and all required documentation has been obtained before approving benefits. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

Material Non‐Compliance Material Weakness, Special Tests and Provisions Criteria: In accordance with 24 CFR sections 982.158(d) and 982.404, units under housing assistance payment (HAP) contract that fail to meet Housing Quality Standards (HQS), the Public Housing Authority (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 HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. Condition: The City did not follow procedures to ensure that the HQS were corrected or subsequent procedures to stop HAP were not enforced. Context: Of the 293 failed inspections during the current year, we examined 60 and determined that 20 (34% valued at $66,952) failed inspections were not corrected or the HAP were not stopped timely. Effect: Owner could receive benefits for which they are not eligible Cause: Lack of proper internal control over HQS enforcement Identification of a Repeat Finding: This is modified and a repeat of Finding 2024-002 from the immediate previous audit. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. The sample results identified $66,952 in known questioned costs. Recommendation: Management should implement controls to ensure that HQS enforcement procedures are followed timely. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

Non-Material Non-Compliance Material Weakness, Eligibility, Special Tests and Provisions Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that applicants have all required documentation in their file. In accordance with 24 CFR Part 5 Subpart F, the City must maintain documentation to support tenant eligibility. In accordance with 24 CFR sections 960.202 through 960.208, the City must establish, adopt, and follow policies for admission of tenants as it relates to the Public Housing waiting list. All families admitted to the program must be selected from the waiting list. Condition: The City did not follow procedures to ensure the proper eligibility determinations were made and documented. Context: Of the 163 applicants during the current year valued at $518,453, we examined 33 (valued at $100,361) and determined that 2 (7% valued at $16,692) applicants were not supported with case documentation to confirm eligibility. Of the 33 applicants we examined, we determined that 1 (3%) applicant did not have documentation to confirm they were selected from the waiting list. Upon further review, the applicant is deemed eligible. Effect: Participants could receive benefits for which they are not eligible Cause: Weakness in implementation of controls over eligibility procedures Identification of a Repeat Finding: This is modified and a repeat of Finding 2024-003 from the immediate previous audit. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. The sample results identified $16,692 in known questioned costs. Recommendation: Tenant files should be reviewed to verify that calculations are accurate, and all required documentation has been obtained before approving benefits. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

Non-Material Non‐Compliance Significant Deficiency, Special Tests and Provisions Criteria: In accordance with 24 CFR section 58.22, CDBG funds (and local funds to be reimbursed with CDBG funds) cannot be obligated or expended before receipt of HUD’s approval of a Request for Release of Funds (RROF) and environmental certification except for exempt activities under 24 CFR section 58.34 and categorically excluded activities under section 58.35 (b). Condition: The City did not follow procedures to ensure the proper HUD approval of a Request for Release of Funds was obtained. Context: Of the CDBG expenditures during the fiscal year, there was 1 project that required HUD’s approval of the RROF and environmental certification. We noted that proper environmental certification was obtained, however the RROF was not. Upon further review, the project was deemed eligible for reimbursement. Effect: CDBG project might not be eligible to receive reimbursement for expenditures. Cause: Lack of proper internal control over HUD approvals. Questioned Cost: This resulted in no questioned costs. Recommendation: Management should implement controls to ensure that HUD approvals are obtained timely. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

Material Non‐Compliance Material Weakness, Special Tests and Provisions Criteria: In accordance with 24 CFR sections 982.158(d) and 982.404, units under housing assistance payment (HAP) contract that fail to meet Housing Quality Standards (HQS), the Public Housing Authority (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 HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. Condition: The City did not follow procedures to ensure that the HQS were corrected or subsequent procedures to stop HAP were not enforced. Context: Of the 130 failed inspections during the current year, we examined 26 and determined that 22 (85% valued at $110,332) failed inspections were not corrected or the HAP were not stopped timely. Effect: Owner could receive benefits for which they are not eligible. Cause: Lack of proper internal control over HQS enforcement. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. The sample results identified $110,332 in known questioned costs. Recommendation: Management should implement controls to ensure that HQS enforcement procedures are followed timely. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

Material Weakness, Eligibility Criteria: In accordance with 2 CFR 200, management should have an adequate system of internal control procedures in place to ensure that applicants have all required documentation in their file. In accordance with 24 CFR Part 5 Subpart F, the City must maintain documentation to support tenant eligibility. Condition: The City did not follow procedures to ensure the proper eligibility determination were made and documented. Context: Of the 180 applicants during the current year valued at $495,432, we examined 36 (valued at $99,685) and determined that 2 (6%) applicants did not have properly calculated resources. Upon further review and recalculation, the two applicants were deemed eligible. Effect: Participants could receive benefits for which they are not eligible. Cause: Weakness in implementation of controls over eligibility procedures. Questioned Cost: None. This finding represents an internal control issue; therefore, questioned costs are not applicable. Recommendation: Tenant files should be reviewed to verify that calculations are accurate, and all required documentation has been obtained before approving benefits. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report. 201

Non-Material Non‐Compliance Significant Deficiency, Special Tests and Provisions Criteria: In accordance with 24 CFR 964.150, when tenant participation funds are provided to a Public Housing Authority (PHA), the PHA must provide those funds to duly elected resident councils. Funding provided by a PHA to a duly elected resident council may be made only under a written agreement between the PHA and the resident council that includes a resident council budget. The agreement must require the local resident councils to account to the PHA for the use of the funds and permit the PHA to inspect and audit the resident council’s financial records related to the agreement. Condition: The City did not follow procedures to ensure compliance of tenant participation fund requirements. Context: The tenant participation fund agreement was not current and expired in 2018. We sampled 7 expenditure and supporting documentation reported to the PHA to determine if resident council expenditure is consistent with the resident council budget. We noted that 4 (58%) expenditures had proper supporting documentations but were not listed in the resident council budget. Effect: Expenditure made that are not consistent with the resident council budget. Cause: Lack of proper internal control over tenant participation funds. Questioned Cost: In accordance with 2 CFR 200, auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Likely questioned costs do not exceed $25,000. Recommendation: Management should obtain a current agreement and implement controls to ensure that tenant participation funds are in place and properly accounted for. Views of Responsible Officials and Planned Corrective Actions: The City agrees with this finding. Please refer to the Corrective Action Plan section of this report.

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