Housing Authority of the City of Greeley, Colorado

Federal Program: Assistance Listing #14.871 - Section 8 Housing Choice Vouchers. Criteria: The green book requires internal control and segregation of duties. Condition: The Housing Authority of the City of Greeley did not utilize staff to adequately segregate duties. Internal controls have not been designed to allow for preparation processes and then segregated review processes. Specifically, segregation of duties was not present for the payroll functions, bank reconciliations and journal entries. Questioned Costs: None. Cause: The lack of adequate policies and procedures regarding segregation of duties can be attributed to management's oversight. Management has not established the necessary internal controls to ensure proper accountability and oversight. Effect: Increased risks of errors and potential fraud within key functions such as payroll, bank reconciliations, and journal entries. Recommendation: We recommended the Authority develop clear policies that define roles and responsibilities, ensuring clear segregation of duties across all critical functions. Hiring additional staff or reassigning existing staff to ensure that no individual has control over multiple critical functions. Create a review process where management or a designated committee regularly reviews key functions to ensure adherence to policies. Management’s Response: Management will adopt policies and procedures that will enhance the segregation of duties with the accounting functions.

Federal Program: Assistance Listing #14.871 - Section 8 Housing Choice Vouchers. Criteria: SAS 99 requires proper documented internal control over journal entries. Condition: The Authority does not have an organized journal voucher system that ensures transparency and accountability in financial reporting. There is not a designated preparer, reviewer, and authorizer. Questioned Costs: None. Cause: Absence of clear guidelines and procedures for creating, approving, and recording journal vouchers can lead to inconsistencies. Employees are not adequately trained on how to segregate their duties within the journal voucher system. Effect: The absence of a structured approval process can make it difficult to hold individuals accountable for financial entries, increasing the risk of fraud or misuse of funds. Variability in how transactions are recorded can lead to inconsistencies, making it challenging to maintain accurate and reliable financial records. Without a formalized process for documenting transactions, errors in recording may go unnoticed, leading to inaccurate financial statements. The inability to easily document and authorize adjustments or corrections can result in delays and increased workload for staff. There is a regulatory compliance risk that can potentially lead to penalties. Recommendation: There should be an individual responsible for initiating the journal entry. A person who verifies the accuracy and appropriateness of the entry. A manager or finance officer responsible for the final approval and authorization of the transaction. Ensure that every journal voucher is backed by adequate supporting documentation, such as invoices, receipts, contracts, or other relevant paperwork that justifies the transaction. Reviewers should follow a standardized checklist to ensure that all key details (such as dates, amounts, account codes, and descriptions) are correct. There should be controls on the approving and posting the journal entries. Management’s Response: Management will develop and install a journal voucher system which requires approval by a person other than the preparer.

Federal Program: Assistance Listing #14.871 - Section 8 Housing Choice Vouchers. Criteria: In accordance with 24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507, the public housing agency (PHA) must determine that the rent to the owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a 5 percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) Condition: The Authority was unable to provide records to document the basis for the determination that rent to owner is reasonable for fifteen out of forty participant households tested. Questioned Costs: None. Cause: The cause is the lack of file reviews for staff members. Effect: The effect is inappropriate rent subsidy could be applied. Recommendation: We recommended the Authority have a reviewer perform a tenant file review once a staff member completes a tenant’s file. Management’s Response: Management will begin to comply with the applicable CFR regulations and begin annual reasonable rent determinations.

2022-001 Inadequate Segregation of duties CURRENT CONDITION: The Housing Authority of the City of Greeley did not utilize staff to adequately segregate duties. Internal controls have not been designed to allow for preparation processes and then segregated review processes. Specifically, segregation of duties was not present for the payroll functions, bank reconciliations and journal entries. 2022-001 Inadequate Segregation of duties (continued) CFDA#: 14.871 CRITERIA: The green book requires internal control and segregation of duties. CAUSE: The Authority had personnel changes during covid and did not distribute functions with adequate review and oversite. EFFECT: The Authority has experienced mistakes in accounting functions. RECOMMENDATION: The Authority should put procedures in place to require checks and balances in the accounting personnel functions. VIEWS OF RESPONSIBLE OFFICIALS: We will comply with the Auditor?s recommendation. DISCUSSED WITH: Tom Teixeira, September 15, 2023

2022-001 Inadequate Segregation of duties CURRENT CONDITION: The Housing Authority of the City of Greeley did not utilize staff to adequately segregate duties. Internal controls have not been designed to allow for preparation processes and then segregated review processes. Specifically, segregation of duties was not present for the payroll functions, bank reconciliations and journal entries. 36 HOUSING AUTHORITY OF THE CITY OF GREELEY Greeley, Colorado DECEMBER 31, 2022 SCHEDULE OF FINDINGS AND QUESTIONED COSTS SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) 2022-001 Inadequate Segregation of duties (continued) CFDA#: 14.871 CRITERIA: The green book requires internal control and segregation of duties. CAUSE: The Authority had personnel changes during covid and did not distribute functions with adequate review and oversite. EFFECT: The Authority has experienced mistakes in accounting functions. RECOMMENDATION: The Authority should put procedures in place to require checks and balances in the accounting personnel functions. VIEWS OF RESPONSIBLE OFFICIALS: We will comply with the Auditor?s recommendation. DISCUSSED WITH: Tom Teixeira, September 15, 2023

2022-003 Filing system and document retention. CURRENT CONDITION: The Housing Authority of the City of Greeley was unable to efficiently locate documents for the audit. CFDA#: 14.850, 14.871 CRITERIA: 24 CFR section 200.334 requires the retention of supporting documentation. CAUSE: The Authority did not have procedures or controls in place to systematically file information. EFFECT: Documents could not be located in a timely fashion. RECOMMENDATION: The Authority should standardize procedures and employee responsibilities. VIEWS OF RESPONSIBLE OFFICIALS: We will comply with the Auditor?s recommendation. DISCUSSED WITH: Tom Teixeira, September 15, 2022

2022-004 Lack of a Journal Voucher system. CURRENT CONDITION: The Housing Authority of the City of Greeley does not have an organized journal voucher system. The Journal Entries have not been centrally filed, they have not been reviewed by another staff member and lack substantiation. CFDA#: 14.850, 14.871 CRITERIA: SAS 99 requires proper documented internal control over journal entries. CAUSE: The Authority experienced staff changes and computer software changes without thoroughly considering making changes to staff and staffing roles. EFFECT: The Authority has inaccuracies, and the work is not completed in a timely fashion.