Housing Authority of Asotin County

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Housing Authority of Asotin County January 1, 2024 through December 31, 2024 2024-002 The Housing Authority did not have adequate internal controls and did not comply with Housing Quality Standards enforcement requirements of its Housing Voucher Cluster program. Assistance Listing Number and Title: 14.871 – Section 8 Housing Choice Vouchers Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA017AFR124 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2023-001 Description of Condition The Housing Authority received $1,524,133 in 2024 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP). The HCVP provides rental assistance to help low-income families afford decent, safe and sanitary rental housing through Housing Authority Payment (HAP) contracts. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Housing Authority must inspect units leased to families at least every two years to determine if they meet federal Housing Quality Standards (HQS) requirements. For units under HAP contracts that fail to meet HQS requirements, the Housing Authority must require owners to correct any cited life-threatening HQS deficiencies within 24 hours of notification of the failed inspection. Owners must correct cited non-life-threatening HQS deficiencies within 30 calendar days of notification or within a specified Housing Authority-approved extension. If owners do not correct cited deficiencies within the specified correction period, the Housing Authority must stop assistance payments by the first of the month following the end of the correction period or must terminate the HAP contract. The Housing Authority must keep documentation demonstrating compliance with HQS enforcement requirements. Our audit found the Housing Authority’s internal controls were ineffective for ensuring compliance with the program’s HQS enforcement requirements. Although the Housing Authority had internal controls requiring owners to correct HQS deficiencies within 30 calendar days of notification of failed inspections, it did not establish effective controls requiring owners to correct cited life-threatening HQS deficiencies within 24 hours of notification, as the program requires. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition Although the Housing Authority provides housing inspection training to staff, those responsible for conducting the HQS inspections did not understand and follow established policies and procedures for identifying certain inspection failures as life-threatening and ensuring owners corrected them within 24 hours of notification. Additionally, while monitoring the program, Housing Authority staff did not identify that inspectors did not separately cite life-threatening deficiencies and follow up with owners as required to ensure owners corrected deficiencies within the correction period. The Housing Authority implemented corrective action after receiving the prior audit finding in September 2024, but was not complying before this date. Effect of Condition Using statistical sampling, we tested six failed inspections and found three with HQS deficiencies defined as life-threatening in the Housing Authority’s policy. The Housing Authority did not have documentation demonstrating it followed up and required the owners to correct the deficiencies within 24 hours of notification. Additionally, it did not comply with the requirement to terminate the HAP contract or stop the HAP for three owners who did not correct deficiencies within the correction period. The Housing Authority reinspected the units and verified the owners corrected the deficiencies within 30 days or the approved 30-day extension period. Because the Housing Authority did not follow up on HQS deficiencies within the required correction period, it cannot demonstrate that the housing units met HQS requirements. Recommendation We recommend the Housing Authority strengthen internal controls to ensure it follows the established policy and complies with HQS enforcement requirements. Specifically, the Housing Authority should follow up on cited life-threatening HQS deficiencies and require owners to correct them within 24 hours of notification, as HCVP requires. Housing Authority’s Response The Housing Authority does concur with the State Auditor’s Office finding that the Housing Quality Standards (HQS) requirements are to follow up with the landlord if any life-threatening deficiencies are identified during an inspection. The requirement states that “If a deficiency is life-threatening, the owner (landlord) must correct the deficiency within 24 hours of notification” (24 CFR 982.404(a)(3)). Although this finding was also included in the prior year’s audit, the Housing Authority acknowledges that the corrective action did not start until September 2024. When the Housing Authority was notified of this finding, a corrective action plan was immediately prepared and implemented. Additionally, the U.S. Department of Housing and Urban Development (HUD) followed up on this finding in June 2025 and the Housing Authority provided the corrective action plan along with supporting documentation to HUD. On June 23, 2025, the Housing Authority received a letter from the HUD Seattle Field Office acknowledging that the Housing Authority had taken the appropriate actions to resolve the finding and avoid the same error in the future. Below is the Housing Authority’s corrective action plan that was implemented in September 2024: • Review HQS/NSPIRE standards with current staff assigned to performing and processing Section 8 inspections during a monthly meeting • Implemented internal controls that ensure life-threatening deficiencies are identified and all required notifications are made • Review of all parts of the Code of Federal Regulations (CFR) and PIH Notices distributed by HUD monthly that pertain to HQS/NSPIRE inspection standards • All pertinent staff have taken the NSPIRE Inspection Standards training (all inspectors and Section 8 Occupancy Specialist) • Updated our process to include the use of a new inspection checklist that separately identifies life-threatening deficiencies, as well as using a new form to document attempts to contact the landlord and track the date that the deficiency was resolved The Housing Authority acknowledges that we lacked the appropriate internal controls prior to September 2024 to identify and notify the landlords of any life-threatening deficiencies that must be corrected within 24 hours. This corrective action plan has been in place since September 2024, and the Housing Authority feels that it is now fully in compliance with the applicable inspection requirements set forth by HUD and any relevant CFRs. Auditor’s Remarks We appreciate the Housing Authority’s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review the status of the Housing Authority’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 404, Maintenance: Owner and family responsibility; PHA remedies, establishes enforcement requirements for housing quality standards.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Housing Authority of Asotin County January 1, 2023 through December 31, 2023 2023-001 The Housing Authority had inadequate internal controls for ensuring compliance with Housing Quality Standards enforcement requirements of its Housing Voucher Cluster program. Assistance Listing Number and Title: 14.871 – Section 8 Housing Choice Vouchers Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA017AFR123 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The Housing Authority received $1,541,725 in 2023 under the Housing Voucher Cluster program, which includes the Section 8 Housing Choice Vouchers program (HCVP). The HCVP provides rental assistance to help low-income families afford decent, safe and sanitary rental housing through Housing Authority Payment (HAP) contracts. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Housing Authority must inspect units leased to families at least every two years to determine if they meet federal Housing Quality Standards (HQS) requirements. For units under HAP contracts that fail to meet HQS requirements, the Housing Authority must require owners to correct any cited life-threatening HQS deficiencies within 24 hours of notification of the failed inspection. Owners must correct cited non-life-threatening HQS deficiencies within 30 calendar days of notification or within a specified Housing Authority-approved extension. If owners do not correct cited deficiencies within the specified correction period, the Housing Authority must stop assistance payments by the first of the month after the correction period ends or must terminate the HAP contract. The Housing Authority must keep documentation demonstrating compliance with HQS enforcement requirements. Our audit found the Housing Authority’s internal controls were ineffective for ensuring compliance with the program’s HQS enforcement requirements. Although the Housing Authority had internal controls for requiring owners to correct HQS deficiencies within 30 calendar days of notification of failed inspections, it did not establish effective controls for requiring owners to correct cited life-threatening HQS deficiencies within 24 hours of notification, as the program requires. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition Although the Housing Authority provides housing inspection training to staff, those responsible for conducting the HQS inspections did not understand and follow established policies and procedures for identifying certain inspection failures as life-threatening and ensuring owners corrected them within 24 hours of notification. Additionally, during monitoring of the program, Housing Authority staff did not identify that inspectors did not separately cite life-threatening deficiencies and follow up with owners as required to ensure owners corrected deficiencies within the correction period. Effect of Condition Using statistical sampling, we tested eight failed inspections and found seven with HQS deficiencies defined as life-threatening in the Housing Authority’s policy. The Housing Authority did not have documentation demonstrating it followed up and required the owners to correct the deficiencies within 24 hours of notification. Additionally, it did not comply with the requirement to terminate the HAP contract or stop the HAP for five owners who did not correct deficiencies within the correction period. The Housing Authority reinspected the units within 30 days to verify whether the owners corrected the deficiencies and stopped the HAP for two owners. We expanded testing and found that 55 out of 72 failed inspections in 2023 had life-threatening deficiencies that the Housing Authority did not follow up on and require the owners to correct within 24 hours of notification as required. Because the Housing Authority did not follow up on HQS deficiencies within the required correction period, it cannot demonstrate that the housing units met HQS requirements. Recommendation We recommend the Housing Authority strengthen internal controls for ensuring it follows the established policy and complies with HQS enforcement requirements. Specifically, the Housing Authority should follow up on cited life-threatening HQS deficiencies and require owners to correct them within 24 hours of notification, as HCVP requires. Housing Authority’s Response The Housing Authority does concur with the State Auditor’s Office finding that the Housing Quality Standards (HQS) requirements are to follow up with the landlord if any life-threatening deficiencies are identified during an inspection. The requirement states that “If a deficiency is life-threatening, the owner (landlord) must correct the deficiency within 24 hours of notification” (24 CFR 982.404(a)(3)). The Housing Authority’s corrective action plan moving forward includes the following: • Reviewing HQS/NSPIRE standards with current staff assigned to performing and processing Section 8 inspections during a monthly meeting • Implement internal controls that ensure all life-threatening deficiencies are identified and all required notifications are made • Review all parts of the Code of Federal Regulations (CFR) and PIH notices distributed by HUD monthly that pertain to HQS/NSPIRE inspection standards • All pertinent staff will take the next NSPIRE Inspection Standards training (all inspectors and Section 8 Occupancy Specialist) • Updating our process to include the use of a new inspection checklist that separately identifies life-threatening deficiencies, as well as using a new form to document attempts to contact the landlord and the date the deficiency is resolved The Housing Authority acknowledges that we lacked the appropriate internal controls to identify and notify the landlords of any life-threatening deficiencies that must be corrected within 24 hours. With this corrective action plan in place as of September 9, 2024, the Housing Authority feels that we are on track to comply with the requirements set forth by HUD and any relevant CFRs. Auditor’s Remarks We appreciate the Housing Authority’s commitment to resolve this finding and thank the Housing Authority for its cooperation and assistance during the audit. We will review corrective action taken during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 404, Maintenance: Owner and family responsibility; PHA remedies, establishes enforcement requirements for housing quality standards.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Housing Authority of Asotin County January 1, 2021 through December 31, 2021 2021-001 The Housing Authority lacked adequate internal controls for ensuring compliance with CARES Act funding and the Housing Quality Standards inspection requirements of its Housing Voucher Cluster program. CFDA Number and Title: 14.871 ? Section 8 Housing Choice Vouchers 14.871 ? COVID 19 ? Section 8 Housing Choice Vouchers Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA017AFR116 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $13,781 Description of Condition During fiscal year 2021, the Housing Authority received $1,215,214 under the Housing Voucher Cluster program (HCVP). Of this amount, the Housing Authority received $31,772 in program funding through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The HCVP provides rental assistance to help families with very low incomes afford decent, safe and sanitary rental housing. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. CARES Act Funding The CARES Act (Public Law 116-136) provides the U.S. Department of Housing and Urban Development (HUD) with supplemental Housing Assistance Program funding to award to Public Housing Agencies (PHAs). To receive funding, PHAs must either experience a significant increase in voucher per-unit costs due to extraordinary circumstances, or despite taking reasonable cost saving measures (as determined by the secretary), would otherwise be required to terminate rental assistance for families as a result of insufficient funding. In Notice PIH 2020-08, published on April 28, 2020, HUD summarized eligible expenses for CARES Act funds and administrative fees. Recipients may use their CARES Act funds for two purposes: (1) any currently eligible HCVP administrative costs during the period that the program is affected by the COVID-19 pandemic, and (2) new COVID-19-related activities, including activities to support the health and safety of assisted people and families, and costs related to retaining and supporting participating owners. In Notice PIH 2020-18, published on July 31, 2020, HUD updated the list of eligible expenses to include new eligible COVID-19 activities. Our audit found the Housing Authority did not establish effective internal controls to ensure it spent CARES Act funds for eligible expenses. Specifically, the Housing Authority did not have documentation showing all costs were either currently eligible HCVP administrative costs affected by COVID-19 or new COVID-19-related activities. We consider this internal control deficiency to be a material weakness that led to material noncompliance. This issue was not reported as a finding in the prior audit. Housing Quality Standard Inspection The CARES Act (Public Law 116-136) provides HUD with broad authority to waive or establish alternative requirements for the HCVP. In Notice PIH 2020?05, published on April 10, 2020, HUD exercised its authority under the CARES Act to establish waivers and administrative flexibilities to provide relief to PHAs in response to the COVID-19 pandemic. Subsequent revisions PIH 2020-33 (issued in November 2020) and PIH 2021-14 (issued in May 2021) allowed PHAs to delay biennial Housing Quality Standard (HQS) inspections for both tenant-based and project-based voucher units, and instead rely on owners? certifications that they have no reasonable basis to have knowledge that life-threatening conditions exist in their unit or any units in question. At minimum, PHAs must require this owner certification. Our audit found the Housing Authority did not establish effective internal controls to ensure compliance with the program?s HQS inspection requirements. Specifically, when the Housing Authority delayed biennial inspections beginning in September 2021, it did not obtain the required owner certifications. We consider this internal control deficiency to be a material weakness that led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition CARES Act Funding The Housing Authority experienced turnover in the Accountant position that was responsible for managing the CARES Act funding. Current employees said they did not know why the costs were charged to the program and were unable to locate additional documentation to show they were eligible. Housing Quality Standard Inspection When Housing Authority management adopted the HUD waiver allowing for delayed HQS inspections, they were unaware of the required alternative procedures to obtain owner certifications. Effect of Condition and Questioned Costs CARES Act Funding Using non-statistical sampling, we tested eight CARES Act expenses and one individually significant expense. Our testing found five of the sampled expenses and the individually significant expense totaling $13,781 were ineligible, including vacation payouts, regular payroll costs, and telephone updates, and did not comply with CARES Act funding requirements. The Housing Authority did not have documentation showing how it determined the eligibility of these expenses. Based on the projection of our non-statistical sample, we identified an additional $11,688 in estimated overpayments. Housing Quality Standard Inspection Using non-statistical sampling, we tested 18 tenant files requiring an inspection during the fiscal year. Our testing found three tenants for which the Housing Authority delayed inspections, as allowed, but did not obtain the required owner certifications. Because the Housing Authority did not obtain owner certifications, it cannot demonstrate that the housing units met HQS inspection requirements. Recommendation We recommend the Housing Authority strengthen internal controls to ensure it complies with CARES Act funding and HQS inspection requirements. Specifically, the Housing Authority should: ? Ensure it spends CARES Act funds for eligible expenses following HUD guidance ? At a minimum, obtain owner certifications for delayed inspections, which the program requires Housing Authority?s Response 1) CARES ACT FUNDING ? The Housing Authority does concur with the States Auditor that we lacked adequate internal controls to track the CARES ACT funding. Our corrective action plan going forward is to create a separate account to track special funding line items instead of it coming from HUD into our sweep account. We are looking at our internal controls and referencing the ?Segregation of Duties Self-Assessment Checklist? on the State Auditor website. The Housing Authority has experienced a high rate of turnover in the last 27 months (4 retired, 1 passed away, 1 for better opportunity and 4 that left after a few months of employment). This has made us look at all our security systems and our internal policies, procedures, and controls. However, we do believe that some expenses were misclassified and should have been covered using alternative funding sources. In the future our internal control processes will ensure that we are in compliance with any special funding requirements. 2) HOUSING QUALITY STANDARDS INSPECTION REQUIREMENTS The HQS requirements were to contact the property owner or manager to verify that there were no emergency action items. Corrective action has already been taken and we currently do HQS inspections on a regular basis (biennial). We did present to the Board, Resolution 578, ?Emergency Actions Authorization? in January 2022 to cover emergencies through the start of the pandemic of March 17, 2020 (COVID-19). Looking back, we should have used an alternative method, video inspections (which we were not equipped to do at the time). Our Section 8 Specialist started July 2021 taking over from an employee in that position for 25 years. Section 8 Specialist had become certified in HQS and Section 8 certification shortly after starting her position. We believe with the training and keeping up to date with all State, Federal and HUD regulations that we will be complying. Auditor?s Remarks We thank the Housing Authority for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the Housing Authority?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 982, Section 8 Tenant-Based Assistance: Housing Choice Voucher Program, section 405, PHA initial and periodic unit inspection, establishes inspection requirements for housing quality standards. Notice PIH 2020-08(HA), CARES Act ? HCV Program Administrative Fees Notice PIH 2020-18(HA), CARES Act ? HCV Program Administrative Fees ? Second Award Notice PIH 2020-33(HA), REV-2, COVID-19 Statutory and Regulatory Waivers and Alternative Requirements for the Public Housing, Housing Choice Voucher (including Mainstream and Mod Rehab), Indian Housing Block Grant and Indian Community Development Block Grant programs, Suspension of Public Housing Assessment System and Section Eight Management Assessment Program, Revision 2. Notice PIH2021-14(HA), COVID-19 Statutory and Regulatory Waivers and Alternative Requirements for the Public Housing, Housing Choice Voucher (including Mainstream and Mod Rehab), Indian Housing Block Grant and Indian Community Development Block Grant programs, Suspension of Public Housing Assessment System and Section Eight Management Assessment Program, Revision 3.