THE HOUSING AUTHORITY OF THE COUNTY OF BOULDER, COLORADO

Finding 2020-002 Department of Housing and Urban Development CFDA #14.871 Section 8 Housing Choice Vouchers Applicable Federal Award Number and Year ? 2020 Special Tests and Provisions - HQS Enforcement Significant Deficiency in Internal Control over Compliance Criteria ? For units under a HAP contract that fail to meet HQS requirements, the PHA must require the owner to correct life threatening HQS deficiencies within 24 hours after the inspection and all other HQS deficiencies within 30 calendar days or within a specified PHA-approved extension. Condition ? During our testing of compliance for HQS Enforcement, we identified 3 instances in which life threatening HQS deficiencies were not resolved within 24 hours of the inspection date. 3 additional instances were identified where proper extensions were not obtained for repairs extending beyond 30 days. Cause ? BCHA?s internal controls related to the proper monitoring and tracking of failed inspections and the subsequent passing of those inspections were not operating as designed. Effect ? Weaknesses in internal control over compliance could result in BCHA failing to abate HAP payments to landlords as required by HUD. Questioned Costs ? None reported. Context/Sampling ? A non-statistical sample of 60 failed inspections were selected for testing. 6 out of the 60 failed inspections did not have proper documentation. Repeat Finding from Prior Year ? No. Recommendation ? We recommend that BCHA establish controls to ensure the proper enforcement of life threatening HQS deficiencies and extension requests. Views of Responsible Officials ? Management agrees with the finding.

Finding 2020-002 Federal Agency Name: Department of Housing and Urban Development Program Name: Section 8 Housing Choice Vouchers CFDA # CFDA #14.871 Finding Summary: Eide Bailly identified 3 instances in which HQS life threatening deficiencies were not resolved within 24 hours of the inspection date, in addition to 3 instances where proper extensions were not obtained for repairs extending beyond 30 days. Eide Bailly found BCHA?s internal controls related to the proper monitoring and tracking of failed inspections and the subsequent passing of those inspections were not operating as designed. Responsible Individuals: Susan Caskey, Interim Co-Executive Director Paul Jannatpour, Interim Co-Executive Director Corrective Action Plan: BCHA is working to respond to the impacts of staffing issues during COVID- 19. During COVID-19, BCHA observed delays with landlord response as it relates to: repair work being completed, tenants not wanting people in their units, limitations with access to rental units for repairs, and an increase in difficulty with scheduling and coordinating contractors and navigating supply issues for materials either being back ordered or discontinued as a result of COVID-19, particularly during high transmission rates. Additionally, the independent contractor had technical issues with accessing the Boulder County system to generate notifications to the landlords for housing fails, resulting in delayed communications to landlords, which has been escalated and addressed with the Boulder County IT department. BCHA is also in process of increasing staffing levels and cross training to ensure that there is adequate staff to follow up on HQS deficiencies within the required timeframe. Another factor that contributes to this is the timing of the failed inspection in respect to the HAP payment processing dates. If HAP checks have already been issued when an abatement would have been placed, staff will schedule the abatement for the following month if repairs have not been completed before that date. Anticipated Completion Date: Fiscal year end December 31, 2021

Finding 2020-003 Department of Housing and Urban Development CFDA #14.871 Section 8 Housing Choice Vouchers Applicable Federal Award Number and Year - 2020 Special Tests and Provisions ? CARES Funding Significant Deficiency in Internal Control over Compliance and Other Matter Compliance Finding Criteria ? Under the CARES Act, the supplemental administrative fee funding may be used only for two purposes (1) any currently eligible HCV administrative costs during the period that the program is impacted by coronavirus, and 2) new coronavirus-related activities, including activities to support or maintain the health and safety of assisted individuals and families, and costs related to the retention and support of participating owners. Condition ? During our testing of compliance related to CARES Act funding, we identified 4 expense transactions charged to the program that were not incurred within the allowable period. Cause ? BCHA?s internal controls were not adequately designed to properly identify allowable expenses of the CARES Act funding. Effect ? BCHA improperly charged expenses to the CARES Act funding. Questioned Costs ? $20,537. Context/Sampling ? A non-statistical sample of 17 expense transactions were selected for testing. 4 of the expense transactions were not incurred within the allowable period. Repeat Finding from Prior Year ? No. Recommendation ? We recommend that HAB establish controls to ensure that expenses are properly charged to federal programs. Views of Responsible Officials ? Management agrees with the finding.

Finding 2020-003 Federal Agency Name: Department of Housing and Urban Development Program Name: Section 8 Housing Choice Vouchers CFDA #: CFDA #14.871Finding Summary: Relative to CARES Act supplemental funding for eligible HCV administrative costs and new coronavirus-related activities to assist with the impacts of the coronavirus on the health and safety of HCV program participants, Eide Bailly identified inadequacies in BCHA?s internal controls in failing to identify 4 expense transactions charged to the funding outside of the allowable funding term. Responsible Individuals: Susan Caskey, Interim Co-Executive Director Paul Jannatpour, Interim Co-Executive Director Corrective Action Plan: Prior to the delivery of the trial balance to Eide Bailly for the 2021 independent audit, BCHA will review all charges to this CARES Act supplemental funding to ensure all charges to the funding are eligible and incurred within the allowable funding term. Anticipated Completion Date: April 4, 2022

Finding 2020-005 U. S. Department of Agriculture CFDA #10.415 Rural Rental Housing Loans Special Tests and Provisions Replacement Reserve Significant Deficiency in Internal Control over Compliance Criteria ? Rural Development requires BCHA to make annual deposits to a replacement reserve account. Condition ? During 2020, BCHA made the required annual deposit to the replacement reserve account, however, there are no controls in place over the monitoring the replacement reserve requirements. Cause ? BCHA?s internal controls are not adequately designed to ensure proper monitoring of the replacement reserve requirements. Effect ? Lack of monitoring over the compliance requirements for replacement reserve could result in replacement reserve deposits not being made timely or in the proper amounts. Questioned Costs ? None reported. Context/Sampling ? N/A ? population 1 deposit. Repeat Finding from Prior Year ? No. Recommendation ? We recommend that BCHA implement controls to include monitoring of the compliance requirements for the replacement reserve. Views of Responsible Officials ? Management agrees with the finding.

Finding 2020-005 Federal Agency Name: U.S. Department of Agriculture Program Name: Rural Rental Housing LoansCFDA #: CFDA #10.415 Finding Summary: Eide Bailly identified a significant deficiency in internal control over compliance in finding that although all necessary deposits occurred during the term under audit, BCHA did not monitor for compliance with replacement reserve requirements. Responsible Individuals: Susan Caskey, Interim Co-Executive Director Paul Jannatpour, Interim Co-Executive Director Corrective Action Plan: BCHA will monitor compliance with replacement reserve requirements as part of preparation steps in the completion of both interim and year-end financial statements. All necessary replacement reserve deposits will require manager or director approval prior to the transfer of funds. Monitoring review and transaction approval will be documented. Anticipated Completion Date: Fiscal year end December 31, 2022