Housing Authority of the City of Monroe

Finding 2025-001 – Low Rent Public Housing Tenant Files – Eligibility – Rent Calculations Noncompliance & Significant Deficiency Low Rent Public Housing – ALN 14.850 Condition & Cause: Our review of seventy-five (75) Low Rent Public Housing tenant files identified noncompliance in ten (10) files, representing 13% of the sample. We noted the following discrepancies: • Seven (7) files contained miscalculations of annual income • Two (2) files where verified deductions were not input onto the 50058 • One (1) file relied on self-declaration without documented attempts to gather the preferred verification The identified deficiencies were the result of employee errors and failure by the Agency to properly review and correct the errors. While the Agency has increased its internal quality control procedures in recent years, misunderstandings in staff roles and responsibilities during the audit period allowed the discrepancies to remain undetected. We were able to extrapolate the total potential misstatement and found it to be immaterial to the financial statements. However, due to the percentage of files not in compliance, we feel the Agency has a significant deficiency in this area. Criteria: The Code of Federal Regulations, the Housing Authority’s Admissions and Continued Occupancy Policy (ACOP), and specific HUD guidelines in documenting and maintaining Public Housing tenant files. Effect: Improper calculation and verification of adjusted annual income can lead to the incorrect calculation of rental charges and misstatements in the financial statements. Ongoing noncompliance may also draw scrutiny from regulatory bodies, increasing the risk of financial penalties or loss of funding for the Public Housing program. Recommendation: We recommend that the Agency continue to monitor and enhance its quality control procedures to ensure the accuracy and adequacy of income calculations and verifications, to assess the need for further staff training, and to effectively monitor compliance with local and federal regulations regarding the maintenance of tenant files. Questioned Costs: None Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2023-003 – Public Housing Tenant Files – Eligibility – Rent Calculations Noncompliance & Significant Deficiency Public Housing Program – ALN 14.850, Grant Year 2022 & 2023 Condition & cause: We reviewed seventy-five (75) Public Housing Tenant Files and noted seven (7) files not in compliance, or 9.3%. We noted the following discrepancies: • Two (2) files with no verification of income; • Two (2) files that relied on tenant declaration without documenting the reason for not obtaining third-party verification; and • Three (3) miscalculations of annual income. The income calculation and verification deficiencies were the result of employee errors and failure by the Agency to properly review and correct the errors. We were able to extrapolate the total potential misstatement and found it to be immaterial to the financial statements. However, due to the percentage of files not in compliance, we feel the Agency has a significant deficiency in this area. Criteria: The Code of Federal regulations, the Housing Authority Admissions and Occupancy Plan and specific HUD guidelines in documenting and maintaining Public Housing tenant files. Effect: Improper calculation and documentation of tenant income can result in misstatement of the financial statements, improper calculation of operating subsidy, and noncompliance with Federal provisions governing the Public Housing program. Recommendation: We recommend that the Agency conduct a thorough tenant file audit of existing tenants to determine whether there are additional deficiencies. We also recommend that the Agency increase their quality control review to adequately monitor compliance with local and federal regulations as it pertains to the maintenance of the tenant files. Questioned Costs: None Repeat Finding: Yes Was sampling statistically valid? Yes

Finding 2022-001 ? Public Housing Tenant Files ? Eligibility ? Rent Calculations ? Noncompliance & Significant Deficiency ? Public Housing Program ? CFDA #14.850, Grant Year 2021 & 2022 Condition & cause: Our review of seventy-five (75) Public Housing Tenant Files revealed the following discrepancies: ? There were eight (8) instances of income miscalculations. We noted that the income miscalculations were mainly related to wage calculation or child support calculations. We extrapolated the total potential error and found it to be material to the financial statements at both the total and singular AMP level. ? There was one (1) instance of a file missing required childcare deduction verification. Criteria: The Code of Federal regulations, the Housing Authority Admissions and Occupancy Plan and specific HUD guidelines in documenting and maintaining Public Housing tenant files. Recommendation: We recommend that the Agency conduct a thorough tenant file audit of existing tenants to determine whether there are any misstatements. We also recommend that the Agency determine the best way to monitor compliance with local and federal regulations as it pertains to the upkeep of the tenant files. Questioned Costs: None Repeat Finding: No Was sampling statistically valid? Yes

Reference # and title: 2021-001 Activities Allowed and Allowable Costs - Payroll Disbursements Federal program and specific federal award identification: CFDA Number Award Year FEDERAL GRANTER/ PASS THROUGH GRANTOR/PROGRAM NAME United States Department of Housing and Urban Development Public and Indian Housing Program 14.850 2020 and 2021 Criteria or specific requirement: Proper internal controls over payroll disbursements and 2 CFR 200 section 200.430 require the employee and supervisor to approve the timesheets of the employee as well as certify the time worked is being properly allocated based on the documentation. Additionally, employees? payroll should be calculated correctly based on time worked. Condition found: During the fiscal year, it was noted that the Housing Authority changed the time management system of employees. With the change, the Housing Authority did not require all employees being charged to the federal program to log their coming and going as well as to certify their time being charged to the federal program. Thirty-two disbursements were tested and the following exceptions were noted: ? Twenty disbursements did not have approval by the employee. ? Fourteen disbursements did not have the employee?s supervisor approval. ? One disbursement amount did not agree to supporting documentation regarding rate of pay. ? Four disbursements included overtime pay but the employees did not qualify for overtime. It was also noted that personnel changes are not always maintained in the personnel file of the employee. Context: This finding appears to be systemic. Possible asserted effect (cause effect): Cause: The Housing Authority changed the payroll process to a new time management system. Effect: The Housing Authority did not meet all federal compliance requirements over activities allowed and allowable costs. Recommendations to prevent future occurrences: The Housing Authority should establish quality control procedures to ensure employees are adequately documenting their coming and going as well as employees and supervisors are adequately certifying time charged to the federal program. Origination date and prior year reference (if applicable): This finding originated fiscal year ended June 30, 2021. View of responsible official: The Monroe Housing Authority automated our payroll system using Segue HR beginning Pay Period 04/03/2021-04/16/2021 (Pay Date 04/23/2021) with parallel payrolls using our legacy Tenmast system and timesheets. The May 21, 2021 payroll (05/01/2021-05/14/2021) is the first payroll used in the new automated system that is reflected in this report. The platform provides Geofencing for all sites and locations. When the system was initially deployed, we required all employees to clock in and out of the system. The new system allowed for timesheets to be auto-sent to the Supervisor at the end of the pay period for approval. Then, the timesheets were sent to the Operations Director for approval. In May, Property Managers faced a learning curve with the functionality of the system, and we were able to assign bulk hours to those team members that do not earn Overtime. The first standalone payroll we conducted was the 05/21/2021 payroll which is highlighted in this Audit. Therefore, we were still in the implementation stages and were still understanding how to create the pay calculations needed for all team members to achieve an accurate payroll and GL that could be uploaded to the prior Tenmast system that was formerly used. In June 2021, certification verbiage was added to the system to ensure staff and Managers certify their payroll. However, the auto-submit functionality was still used, whereby at the end of the pay period, when employees, did not automatically move the timesheet to the Manager/Supervisor, the system automatically moved it forward. Additionally, over 200 pay calculations have been written for the system to properly capture and calculate overtime for all of staff positions.

Reference # and title: 2021-002 Public Housing Waiting Lists Federal program and specific federal award identification: CFDA Number Award Year FEDERAL GRANTER/ PASS THROUGH GRANTOR/PROGRAM NAME United States Department of Housing and Urban Development Public and Indian Housing Program 14.850 2020 and 2021 Criteria or specific requirement: The Housing Authority must establish and adopt written policies for admission of tenants. The Housing 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 rejection of an applicant (24 CFR sections 960.202 through 960.206). The Housing Authority is required to follow its written policies and procedures when adding applicants to and selecting applicants from the waiting lists. Condition found: The waiting list was tested to determine if applicants were being adequately added to and selected from the waiting list. The following exceptions were noted. One item noted is that individuals are not adequately monitoring the waiting list in full. When an apartment becomes available, the property manager will pull a batch report from the waiting list for the top individuals. In the review of the batch reports, it appears that the Housing Authority?s applicant program is not working properly. For instance, for one property, the November 2020 batch report did not properly include individuals on the waiting list. However, these missing applicants were not reflected until the February 2021 batch report. Based on another report provided, the individual ranked as number 1 on the November 2020 waiting list was not reflected on the batch report for November, but was reflected as number 4 for February. Another item noted is that applications are not reviewed until an apartment is available and the applicant is called in for the apartment. Because the applications are submitted by the applicant through an online database, the application is printed at the time the property manager calls the applicant in. The printed application does not reflect the time and date the application is submitted, the preferences that the applicant selected nor does it reflect any certifying signature/date by the applicant. It was also noted that the Housing Authority?s system does not maintain the application in the system as a historical document. For instance, in testing the application for a new move-in, it was noted that the application was not printed and placed in the resident file. When the property manager printed the application that the system showed was submitted in 2019, the printed application reflected 2021 information. When selecting twelve new move-ins during the fiscal year to ensure the Housing Authority is selecting from the waiting list properly, the following exceptions were noted: ? Five new move-ins could not be properly traced to the batch report printed by the property manager. ? Four new move-ins reflected preference points in the system; however, the resident?s file was missing the support for the preferences given. Based on the Housing Authority?s policy, if the applicant is not able to support the preferences selected, then the applicant?s preference points should be removed, which would result in the applicant to be moved down on the waiting list. It does not appear that this policy was followed. ? One new move-in had proper documentation regarding the preferences; however, the property manager did not report the information correctly on the resident?s 50058 form. Due to the Housing Authority not reviewing applications near the time of submission and only pulling the information when an apartment is available, the auditor could not adequately test the applicants added to the waiting list to determine if the applicants were added in the correct order. Context: This finding appears to be systemic. Possible asserted effect (cause effect): Cause: The auditor was unable to determine the cause. Effect: The Housing Authority did not meet all federal compliance requirements related to Special Tests and Provisions over the Waiting Lists. Recommendations to prevent future occurrences: The Housing Authority should establish quality control procedures to ensure individuals selected from the waiting lists have all required documentation related to the applicant?s preferences. The Housing Authority should also establish procedures to ensure waiting lists are being maintained for supporting documentation. It is also recommended that the Housing Authority contact the software provider and request that the applications reflect the preferences selected by the applicant as well as reflect the date, time and certified signature of applicant. Origination date and prior year reference (if applicable): This finding originated fiscal year ended June 30, 2021. View of responsible official: Monroe Housing Authority is in the process of contacting our Software provider and requesting that the applications reflect the preferences selected by the applicant as well as reflect the date and time the application was submitted. Monroe Housing Authority will also require that the software maintain the applications in the system. The following quality control procedures will be put in place to monitor the waiting list: 1. The Compliance Department will conduct random samples of move-ins on a monthly basis to ensure federal compliance requirements are being maintained including, applicants having required documentation related to the applicant?s preferences and that the applications are being properly pulled from the system. 2. After the requested software changes have been made, the staff will receive additional training on waiting list procedures.

Reference # and title: 2021-003 Tenant Participation Funds Federal program and specific federal award identification: CFDA Number Award Year FEDERAL GRANTER/ PASS THROUGH GRANTOR/PROGRAM NAME United States Department of Housing and Urban Development Public and Indian Housing Program 14.850 2020 and 2021 Criteria or specific requirement: In accordance with 24 CFR section 964.150, the local resident councils are required to have a written agreement between the Housing Authority and resident council that includes a resident council budget. The agreement must require the local resident council to account to the Housing Authority for the use of the tenant participation funds and permit the Housing Authority to audit the resident council?s financial records related to the agreement. Condition found: Although the Housing Authority is permitted to review expenses of the resident council, the Housing Authority was unable to provide a copy of the written agreements as well as the resident council budgets for the fiscal year ended June 30, 2021. Context: This finding appears to be systemic. Possible asserted effect (cause effect): Cause: The Housing Authority has experienced a change in employees that oversee the resident council agreements and budgets. Effect: The Housing Authority did not meet all federal compliance requirements related to Special Tests and Provisions over the Tenant Participation Funds. Recommendations to prevent future occurrences: The Housing Authority should establish quality control procedures to ensure resident council agreements and annual budgets are established and maintained. Origination date and prior year reference (if applicable): This finding originated fiscal year ended June 30, 2021. View of responsible official: Due to the COVID-19 pandemic, resident activities have been severely curtailed these last 2 years and we did not require budgets to be prepared. We are in the process of updating our agreements with the various resident councils. Soon after the 1st of the year, notices will be sent to each of our resident councils detailing the funds available to them so they may begin preparing their annual budgets. Resident councils will also be instructed to prepare amended budgets should there be any significant changes that occur during the year.

Reference # and title: 2021-004 Capital Fund Environmental Reviews Federal program and specific federal award identification: CFDA Number Award Year FEDERAL GRANTER/ PASS THROUGH GRANTOR/PROGRAM NAME United States Department of Housing and Urban Development Capital Fund Program 14.872 2019 and 2020 Criteria or specific requirement: In accordance with 24 CFR Parts 50 and 58, the Housing Authority is required to complete an environmental review for any projects or activities before the Housing Authority may acquire, rehabilitate, convert, lease, repair or construct property, or commit HUD or local funds at an assisted or to-be-assisted site. Condition found: During the fiscal year ended June 30, 2021, the Housing Authority had seven various projects or activities utilizing Capital Fund monies. The Housing Authority was unable to provide the environmental reviews for the Burg Jones renovations project and the Frances Towers elevator project that was requested by the auditor. Context: This finding appears to be systemic. Possible asserted effect (cause effect): Cause: The Housing Authority has experienced a change in employees within the department that oversees the Capital Fund programs, and these employees have not received training over the program. Effect: The Housing Authority did not meet all federal compliance requirements related to Special Tests and Provisions over Environmental Reviews. Recommendations to prevent future occurrences: The Housing Authority should provide adequate training to new staff as functions and assignments change. Also, the Housing Authority should establish quality control procedures to ensure environmental reviews are adequately obtained. Origination date and prior year reference (if applicable): This finding originated fiscal year ended June 30, 2021. View of responsible official: The Housing Authority has been completing environmental reviews solely for new construction as of late. Now that new employees have been informed of the need for more extensive procedures, they will ensure that environmental reviews will be performed at least every 5 years on all properties that utilize Capital Funds or Public Housing operating funds. Planning and Development employees will also be provided with training on all aspects of their job functions.

Reference # and title: 2021-005 Activities Allowed and Allowable Costs - Vendor Disbursements Federal program and specific federal award identification: CFDA Number Award Year FEDERAL GRANTER/ PASS THROUGH GRANTOR/PROGRAM NAME United States Department of Housing and Urban Development Capital Fund Program 14.872 2019 and 2020 Criteria or specific requirement: In accordance with 24 CFR Section 905.200, the Housing Authority should establish approved budgets and approved 5-year action plans. The Housing Authority may not incur costs if not reflected in the approved budgets and 5-year action plans. However, budget revisions may be approved by HUD for deviations from the originally approved program. Condition found: During the fiscal year ended June 30, 2021, the Housing Authority had seven various projects or activities utilizing Capital Fund monies. In testing twenty-five vendor disbursements, it was noted that eleven disbursements, which was for three projects, were not reflected in the capital fund budget. However, these projects are included in the 5-year plan. Context: This finding appears to be systemic. Possible asserted effect (cause effect): Cause: The Housing Authority has experienced a change in employees within the department that oversees the Capital Fund programs, and these employees have not received training over the program. Effect: The Housing Authority did not meet all federal compliance requirements related to Activities Allowed and Allowable Costs. Recommendations to prevent future occurrences: The Housing Authority should provide adequate training to new staff as functions and assignments change. Also, the Housing Authority should establish quality control procedures to ensure expected projects are reflected in the budgets and 5-year action plans. Any budget revisions should be submitted to HUD in a timely manner. Origination date and prior year reference (if applicable): This finding originated fiscal year ended June 30, 2021. View of responsible official: The Planning and Development Department experienced complete turnover twice within the last few years. Prior employees were utilizing spreadsheets that included the Capital Fund expenditures that were planned as if they had already been approved, but the steps required to process those amendments to the 5-year action plan and annual budget statement were not taken. New employees erroneously trusted working documents on existing projects without realizing that they had not been approved. The applicable 5-year plan and annual budget statement for 2019 have been updated and provided to auditors within the audit period. Going forward, P&D personnel will ensure that all projects utilizing Capital Funds are reflected in their corresponding action plans and CFP budgets. Planning and Development employees will also be provided with training on all aspects of their job functions.

Reference # and title: 2019-002 Controls over Davis Bacon Act Monitoring Federal program and specific federal award identification: CFDA Number Award Year FEDERAL GRANTER/ PASS THROUGH GRANTOR/PROGRAM NAME United States Department of Housing and Urban Development Capital Fund Program 14.872 2017 and 2018 Criteria or specific requirement: In accordance with the Davis Bacon Act at 29 CFR part 5, for construction contracts in excess of $2,000, the Housing Authority is required to perform reviews of contractors and subcontractors wages paid to construction workers to ensure amounts being paid are in accordance with the prevailing wage rates for the related work performed. This review includes obtaining weekly payroll reports and performing interviews of contractors? and subcontractors? employees in such frequency as necessary to assure compliance with the Davis Bacon Act. Condition found: When testing the controls over the Davis Bacon Act requirements, it was noted that, although the Housing Authority was receiving and reviewing the weekly payroll reports, the Housing Authority had not adequately performed interviews of contractors? and subcontractors? employees. The Housing Authority had two construction projects going at one time that included multiple subcontractors. The Housing Authority was only able to provide interviews for one on the projects that were performed during the fiscal year. Context: The Housing Authority has a third party that assist with the interview process. For the two construction projects in questioned, the same contractor received the project. However, the projects require multiple subcontractors to complete the job. This appears to be systemic. Possible asserted effect (cause effect): Cause: The auditor was unable to determine the cause. Effect: The Housing Authority?s controls over Davis Bacon Act monitoring are weakened. Recommendations to prevent future occurrences: The Housing Authority should establish monitoring procedures over employee interviews to ensure they are adequately performed to assure compliance with the Davis Bacon Act. Origination date and prior year reference (if applicable): This finding originated fiscal year ended June 30, 2019.

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