HOUSING AUTHORITY OF THE CITY OF HARTWELL

HOUSING AUTHORITY OF THE CITY OF HARTWELL SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2020 2020-001 CFDA #14.872 ? Public Housing Capital Funds Program ? Procurement and Suspension and Debarment Condition and Criteria: During our audit, it was determined that, under prior management, internal control deficiencies over compliance existed related to the Authority?s compliance with the Housing Capital Fund Program?s procurement and suspension and debarment compliance provisions. In accordance with 2 CFR part 215.40 through 215.48, all procurement transactions should be conducted in a manner in which to provide, to the maximum extent practical, open and free competition. It also states that some form of cost or price analysis shall be made and documented in the procurement files in connection with every procurement action. Lastly, in accordance with the Authority?s Procurement Policy, small purchase procedures for purchases or procurements of goods and services in excess of $3,000 but not exceeding $150,000 requires documentation of all quotes that must be maintained in the procurement file. Also, in accordance with 2 CFR part 180, for covered transactions, non-Federal entities are required to verify that entities are not suspended, debarred, or otherwise excluded before contracting with the entities. Amount of Questioned Costs: $5,200 Context: Under prior management, as a result of the determination that the internal controls over procurement and suspension and debarment were likely to be ineffective, and due to the fact that the Authority explained that they could not locate any procurement files for our audit, no tests of noncompliance were performed. However, a test of internal controls over procurement compliance looked at disbursements for adequate supporting procurement files and documentation. Of the 3 disbursements that were tested, 1 disbursement fell under, and required compliance with the Authority?s Procurement Policy Small Purchases procedures. This disbursement lacked supporting procurement documentation evidencing whether or not proper procurement actions were taken or compliance requirements were followed. The total amount of costs tested for the audit totaled $7,650. Known questioned costs therefore constituted 68% of the total costs tested. Cause: Under prior management, the Authority?s internal controls over the Public Housing Capital Funds Program?s procurement and suspension and debarment compliance provision that were in place were deficient. Authority employees with the ability to procure goods and services were not complying with Federal procurement regulations or the Board-approved Procurement Policy as adequate documentation of all procurement actions was not being maintained on file, including documentation of bids or quotes, cost or price analysis, and verification of suspension and debarment from the System for Award Management (SAM) Exclusions website. Effect: Under prior management, as a result of a lack of supporting procurement documentation on file, the Authority may have procured goods and services that did not provide for open and free competition, or that were not reasonably priced, which could have led to Federal funding waste. Also, the lack of evidence that the Authority obtained verification that awarded contractors were not suspended or debarred means that the Authority may have entered into covered transactions with contractors who were prohibited from contracting on projects using Federal awards, which opens up the Authority to the potential for contracting with a contractor who may have previously committed fraud, embezzlement, theft, etc., or that has a history of failing to perform. Auditor?s Recommendation: We recommend that the Authority review over all of their ongoing contracts and, for those contracts that are either missing or expired, perform the necessary procurement actions and ensure that all procurement actions are adequately documented and maintained on file in accordance with the Authority's Board-approved Procurement Policy. Grantee Response: Current management acknowledges the finding and will follow the auditor?s recommendation.

HOUSING AUTHORITY OF THE CITY OF HARTWELL SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2020 2020-002 CFDA #14.872 ? Public Housing Capital Funds Program ? Wage Rate Requirements Condition and Criteria: The Authority, under prior management, was not able to provide necessary documentation such as the weekly certified payroll report and employee interviews as required by the Department of Labor?s Davis-Bacon Act. The Davis-Bacon Act requires a contractor whose contract is over $2,000 to provide weekly certified payrolls to prove that they are paying prevailing wage rates. Amount of Questioned Costs: None. Context: Under prior management, as a result of the determination that the internal controls over Dave- Bacon wage rate requirements were likely to be ineffective, and due to the fact that the Authority explained that they could not locate any weekly certified payrolls or interviews for our audit, no tests of noncompliance were performed. Cause: Under prior management, no procedure existed for Capital Fund Program projects to follow up on stipulations within the contract requiring contractors to submit weekly wage reports, nor does a procedure exist whereby the Authority interviews contracted employees to ensure they are being paid fairly. Effect: Under prior management, the Authority did not have proper controls in place to ensure compliance with the Department of Labor?s Davis-Bacon Act. As a result, contractors could be underpaying works while working on Authority projects. Auditor?s Recommendation: We recommend that the Authority implement procedures to follow up on the obligations of contractors to produce weekly wage reports and compare them with prevailing wage rates. Also, make physical inspections and interview employees to ascertain that information is accurate. Grantee Response: Current management acknowledges the finding and will follow the auditor?s recommendation.