NAVAJO HOUSING AUTHORITYTribal Government

2024-002 Internal Controls over Compliance, Material Noncompliance - Equipment and Real Property Management (Material Weakness) Repeated and Modified (Prior Year Finding 2023-003) Federal Program Information: Funding Agency: Title: Federal Assistance Listing Number: Award Year and Number: Department of Housing and Urban Development Indian Housing Block Grant 14.867 2024; 55IH0402810 Criteria or specific requirements: 2 CFR Section 200.313 (d) 1 requires the Authority to maintain property records that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, acquisition date, cost of the property, percentage of Federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Condition: The Authority lacks a comprehensive capital asset tracking system or roll forward mechanism to accurately monitor capital assets. This includes maintaining essential information such as descriptions, serial or identifying numbers, funding sources, locations, and conditions. Cause: Procedures are not in place to ensure that a capital assets listing of buildings, real property, and equipment is regularly maintained. Effect: The Authority is not in compliance with federal requirements related to equipment and real property management. Questioned Costs: The extent of the questioned costs is unknown. Auditor's Recommendation: The Authority should develop a system to track capital assets, including description, serial or other identifying number, source of funding, location, and condition.

2024-003 Internal Control Over Compliance, Material Noncompliance - Eligibility (Material Weakness) Repeated and Modified (Prior Year Finding 2023-005) Federal Program Information: Funding Agency: Title: Federal Assistance Listing Number: Award Year and Number: Department of Housing and Urban Development Indian Housing Block Grant 14.867 2024; 55IH0402810 Criteria or specific requirement: Per 25 USC 4133(d), each grant recipient shall develop written policies governing the eligibility, admission, and occupancy of families for housing assisted with grant funds. The Authority has developed such policies to include a verification of applicant income, as well as an annual redetermination of rent based upon a recertification of income. Condition: For the IHBG program, seven out of forty-five participants tested did not follow the eligibility requirements in accordance with the Authority's policies. Cause: The program did not perform the required eligibility determinations in accordance with its policies. Effect: The rental charges collected by the Authority or assistance provided by the Authority may not be reflective of the program requirements. Questioned Costs: The extent of the questioned costs is unknown. Auditor's Recommendation: We recommend that the Authority adhere to existing policies and procedures requiring eligibility certification or recertifications for all participants of the program.

2021-1 Condition: Deficiencies Were Noted in Our Examination of Tenant Files Out of 90 Rental, Mutual Help, Homeownership, Lease Purchase and Voucher files reviewed, the following deficiencies were noted: 10 PR files lacked timely annual recertification for FY 2021 6 PR files lacked Annual Recertification FY 2021 6 HO files lacked Annual Recertification FY 2021 18 PR files lacked complete support for new admission CFDA Number: 14.867 Questioned Costs: None Cause: The Authority did not have adequate internal controls (monitoring) to determine that they were not in compliance with regulations or their own policies. Effect: The Authority has not been in complete compliance with HUD requirements. Criteria: The Authority is required by regulation and their own administrative policies to perform certain procedures to ensure that the program is administered in accordance with HUD regulations. Recommendation: In general, we continue to recommend a review of the re-certification process to determine areas of weakness. Specifically, we recommend the use of a standard checklist in the re-certification process. We also recommend more standardization in resident file organization of information. Reply: We will regularly review the recertification process to determine areas of weakness. We have created a standard re-certification checklist and will routinely audit our re-certification staff to insure proper documentations. We will review all resident files on a monthly basis with results of these reviews being forwarded to the Housing Management Division Director and, if deficiencies are found, they will be corrected immediately. Deficiencies will also be tracked in order to determine if additional staff training is needed. The Housing Management Division Director and the Housing Directors are charged with the responsibility of ensuring proper documentation of Public Rental and Homeownership folders during the Annual Inspection and Annual Re-certification process.

2021-2 Condition: Deficiencies Noted in Our Examination of Emergency Rental Assistance (ERA) Files Out of 15 ERA Files the following deficiencies were noted: 2 ERA files lacked sufficient support for the amount of rental assistance paid to the participant. Additionally, the Authority could not provide a listing of participants served by the program including the essential items tracked by the ERA guidance. CFDA Number: 14.ERA Questioned Costs: None Cause: The Authority did not have adequate internal controls (monitoring) to determine that they were not in compliance with regulations or their own policies. Effect: The Authority has not been in complete compliance with the Department of Treasury and HUD guidance. Criteria: The Authority is required by regulation and their own administrative policies to perform certain procedures to ensure that the program is administered in accordance with HUD regulations. Recommendation: In general, we continue to recommend a review of the ERA program to determine areas of weakness. Specifically, we recommend the use of a standard checklist in the process. We also recommend more standardization in file organization of information. Reply: We concur with the Auditors recommendation. We will review the ERA program for any areas of weakness to ensure the program is in accordance with HUD regulations.

2021-3 Condition: Failure to take the required inventory of IHA property and equipment every two (2) years The Authority has not performed a periodic physical inventory of federal equipment in the last two (2) years. The Authority has recorded in its property ledger all office equipment, computers, vehicles, and property purchased by the Authority. However, the Authority has not performed a physical observation so that a periodic review of the items can be performed. Such an inventory is necessary to ensure that the assets secured with Federal Funds are controlled throughout their useful life. CFDA Number: 14.867 Questioned Costs: None Cause: Internal control procedures addressing this requirement have not been established Effect: Lack of physical controls and security over the Authority's property and equipment Criteria: OMB A-102 Commend Rule, Section 32, paragraph d(2) and Governmental Accounting Standards (Yellow Book) Recommendation: We recommend that the Authority establish control policies and procedures in accordance with the "Common Rule" and to safeguard their fixed assets in accordance with the "Yellow Book". Reply: Management agrees with the audit finding and has a plan in place to correct the condition.

2021-4 Condition: Failure to properly record Program Income (PI) from the Authority's Indian Housing Plan / Annual Performance Report for the period ended September 30, 2021. During the preparation of the year end Annual Performance Report, the Authority failed to properly record actual accrual basis general ledger figures to be reported in the Annual Performance Report section of the Fiscal Year 2021. Reporting submission date is ninety (90) days after the Authority's fiscal year December 31, 2021. CFDA Number: 14.867 Questioned Costs: None Cause: Loss of key personnel with knowledge of the HUD submission requirements Effect: Required Federal Financial Reports not submitted HUD has affected proper evaluation performance Criteria: 2 CFR 200 reporting requirements, and 2020 Compliance Supplement Recommendation: We recommend that the Authority submit accrued based figures in their future Indian Housing Plan./Annual Performance Reports. Reply: We concur with the Auditors recommendation. We will have the Finance Department review the IHA Control Policy and set up procedures to assure proper control over reporting financial data in the Annual Performance Report to the Indian Housing Plan.

2021-5 Condition: Deficiency noted in HUD recommended investment policy and proper collateralization of the IHA cash equivalents and investments in Fiscal year 2018, and as of the end of audit field work on July 24, 2019 During our audit, we noted that although the Authority has executed HUD form 52736 (General Depository Agreement) with certain of its financial institutions, the Authority did not have evidence of collateralization from these institutions as required in HUD Form 52736, paragraph 2, for certain funds on account with financial institutions. Additionally, we observed that the Authority?s investments are not falling within 24 CFR 1000.58, paragraph 5, page 3. The majority of the Authority?s investments appear to be in non-federal investments for the current fiscal year end. CFDA Number: 14.867 Questioned Costs: None Cause: The Authority's deficiency stems from a lack of controls concerning HUD requirements and procedures. Effect: The Authority has not been in complete compliance with HUD Requirements. Criteria: HUD Form 52736 (General Depository Agreement), paragraph 2 states "any portion of the Authority funds not insured by a Federal insurance organization shall be fully (100%) and continuously collateralized with specific and identifiable U.S. Government of Agency securities prescribed by HUD and held by a third party independent of the investment institution." Recommendation: We recommend that the Authority monitor collateral for adequate coverage. If the Bank refuses to support collateralization as required by HUD, we also recommend that the Authority consider securing other banking arrangements. Reply: Management agrees with the audit finding and is currently working with the financial institution to ensure that they have provided the adequate coverage support for collateralization.

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