HOUSING AUTHORITY OF THE CITY OF LIVINGSTON

Finding 2024-001: Reportable Finding Considered a Significant Deficiency – Inclusion of Unallowable Costs in the SEFA Program Name: STEM Education Assistance Listing #: 47.076 Program Year: 2024 Federal Awarding Agency: National Science Foundation Compliance Requirement: SEFA Preparation Criteria: According to 2 CFR Part 200, Subpart F, §200.510(b), the auditee must prepare a SEFA for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502. The SEFA must also include the CFDA number, the name of the Federal program, and the total amount expended. Condition: During our allowable cost testing, four exceptions were noted out of 15 selections. The first exception involved a transaction that included an estimated expense exceeding the actual cost incurred and falling outside the grant’s period of allowability. The other 3 exceptions pertained to an expense related to a future fiscal year, which had not yet been incurred at the time of recognition and was outside the grant’s period of performance. The client did not request reimbursement for these expenditures and subsequently removed them from the general ledger in 2024. However, the removal of these expenses was not properly reflected on the SEFA schedule. Cause: The improper preparation of the SEFA schedule was due to inadequate internal controls over financial reporting and lack of proper training for staff responsible for reporting the SEFA expenditures. Additionally, there was insufficient review and oversight of the SEFA preparation process. Effect: A total of $19,374 of expenses were incorrectly included in the SEFA. Failure to remove these expenses from the SEFA misrepresented the total amount of federal assistance expanded and may impair the usefulness of the SEFA for the oversight federal agency. Questioned Costs: None. Repeat finding: This is not a repeat finding. Recommendation: We recommend the Organization revise its SEFA preparation procedures to ensure that only allowable and reimbursable expenditures of federal awards are reported. Management should provide additional training to staff responsible for SEFA preparation and implement a formal review process to verify the accuracy of SEFA amounts. Views of Responsible Officials and Planned Corrective Action (unaudited): See Corrective Action Plan.

Finding 2024-002: Reportable Finding Considered a Significant Deficiency – Procurement Compliance Program Name: STEM Education and NSF Technology, Innovation, and Partnerships Assistance Listing #: 47.076 and 47.084 Program Year: 2024 Federal Awarding Agency: National Science Foundation Compliance Requirement: Procurements Criteria: In accordance with 2 CFR 200.320(c), noncompetitive procurement may only be used under limited circumstances such as: the procurement does not exceed the micro-purchase threshold, the item is only available from a single source, an emergency or public exigency prevents a delay, the federal agency or pass-through entity provides prior written approval for noncompetitive procurement or after solicitation of multiple sources, competition is deemed inadequate. Unless one of these situations applies, the Organization is required to provide full and open competition in line with their established procurement policies. Condition: During our testing, we noted the procurement policies and standards were not followed for both of the two procurements selected for testing. Cause: The procurement policies were not followed due to the Organization believing they had met the criteria for noncompetitive procurement. For one selection, the Organization included the vendor in their original proposal and budget, believing this constituted prior approval. However, the regulation requires a specific written request and written approval from the federal agency, which was not obtained. For the other, the Organization believed the procurement was under the micro-purchase threshold, however the contract totaled $24,300. Although individual charges were allocated to separate grants and coded as amounts under the $10,000 micro-purchase threshold, the full contract amount exceeded that threshold and under 2 CFR 200.320, procurements must be considered in aggregate. Effect: The Organization did not obtain price quotations or bids for purchases from two vendors exceeding the micro-purchase threshold as required by 2 CFR 200.320. Questioned Costs: None. Repeat finding: This is not a repeat finding. Recommendation: We recommend that the Organization revisit its procurement policy to include these clarifications and ensure all staff involved in the acquisition of property or services charged to federal grants are aware of and re-trained on the relevant procurement requirements. Views of Responsible Officials and Planned Corrective Action (unaudited): See Corrective Action Plan.

Finding 2024-003: Reportable Finding Considered a Significant Deficiency – FFATA Reporting Compliance Program Name: NSF Technology, Innovation, and Partnerships Assistance Listing #: 47.084 Program Year: 2024 Federal Awarding Agency: National Science Foundation Compliance Requirement: Reporting Criteria: In accordance with 2 CFR 170.200 and 2 CFR Part 170 Appendix A, prime recipients of federal grants that make first-tier subawards of $30,000 or more must report subaward data through the FFATA Subaward Reporting System (FSRS) by the end of the month following the month in which the subaward obligation was made. Condition: During our audit, we selected 6 first-tier sub awards for testing. One subaward was for $30,000 and it was determined that it had not been reported in the FSRS. Cause: The Organization was unaware of the FFATA reporting requirements and lacked internal policies and procedures to ensure timely and accurate reporting of subawards. Effect: Failure to comply with FFATA reporting requirements may result in noncompliance with federal grant terms and could impact future federal funding eligibility. Questioned Costs: None. Repeat finding: This is not a repeat finding. Recommendation: We recommend that the Organization establish formal procedures to identify and track subaward obligations that meet the FFATA reporting threshold. Designated personnel should be trained on the reporting requirements, and reporting deadlines should be incorporated into the grants management calendar. Additionally, management should review FFATA reporting status monthly to ensure ongoing compliance. Views of Responsible Officials and Planned Corrective Action (unaudited): See Corrective Action Plan.