CITY OF PORT HUENEME

Current Year Findings and Questioned Costs ? Major Federal Award Program Audit Finding 2022-002 Reporting ? Internal Control and Compliance over Reporting Identification of the Federal Program: Assistance Listing Number: 14.871 Assistance Listing Title: Section 8 Housing Choice Vouchers Federal Agency: Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Number and Award Year: CA032 Criteria: HUD-52648, SEMAP Certification ? Addendum for Reporting Data for Deconcentration Bonus Indicator (OMB No. 2577-0215) ? PHAs with jurisdiction in metropolitan Fair Market Rent areas have the option of submitting data to HUD with their annual Section Eight Management Assessment Program (SEMAP) certifications on the percent of their tenant-based Section 8 families with children who live in and who have moved during the PHA fiscal year to low poverty census tracts in the PHA?s principal operating area. Submission of this information with the SEMAP certification makes the PHA eligible for bonus points under SEMAP (24 CFR section 985.3(h)). The following federal fiscal year quarter reporting period will be used for all quarterly reports, are due to HUD 30 days after the period end dates. HUD-52681-B, Voucher for Payment of Annual Contributions and Operating Statement (OMB No. 2577-0169). The PHA submits this form monthly to HUD electronically via the VMS. Congress has instructed HUD to use VMS data to determine renewal funding levels. HUD also uses VMS data for other funding, monitoring, and SEMAP-related decisions. HUD relies on the audit of the key line items below to determine the reasonableness of the data submitted for the purposes of calculating funding under the program. Condition: For the Section 8 Housing Choice Vouchers program, the City did not submit the reports within the required deadline: Report Type Reporting Period (End Date)Report Submission Deadline Report SubmissionDateSF-425 Federal Financial Report August 2021September 22, 2022September 24, 2022SF-425 Federal Financial Report July 2021August 22, 2022August 26, 2022 Cause: The City did not have internal controls in place to ensure that financial and performance reports are filed timely. Effect or Potential Effect: Delay in filing the reports resulted in non-compliance with the compliance requirements. Questioned Costs: None. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City strengthen internal controls by implementing procedures to ensure the timely filing of financial and performance reports. View of Responsible Officials: The City agrees with the auditor's finding. The City's Finance Department has implemented procedures to monitor the filing of financial and performance reports.

Finding: 2022-003 Allowable Costs/Cost Principles ? Internal Control and Compliance over Payroll Expenditures Identification of the Federal Program: Assistance Listing Number: 14.871 Assistance Listing Title: Section 8 Housing Choice Vouchers Federal Agency: Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Number and Award Year: CA032 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to ?200.430 Compensation - Personal Services under Uniform Guidance Title 2 Grants and Agreement, Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart E ? Cost Principles: In general, costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph in accordance with the Standards for Documentation of Personnel Expenses. When budget estimates are used, the Standards for Documentation of Personnel Expenses require the following: Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that:(A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: During our audit, we noted payroll allocation of the one employee in six selected payroll periods didn?t match with the current approved payroll distribution schedule. Furthermore, there was no updated cost allocation plan after fiscal year 2020, and there was no further justification of actual activities performed by the City staff during the year to the budgeted allocation. Cause: The program did not follow the Uniform Guidance requirements. Effect or Potential Effect: Without further reviewing and reconciliation over actual activities performed by the City staff, it resulted in the City not in compliance with the Uniform Guidance. Questioned Costs: $2,813 Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City incorporate the Uniform Guidance requirements into its existing policies and procedures to ensure the City is in compliance with the Uniform Guidance. Views of Responsible Officials: The cost allocation study is currently being updated and any changes will be reflected in the next fiscal year.