HOUSING AUTHORITY OF THE CITY OF LITTLETON

U.S. Department of Housing and Urban Development – CFDA #14.871 Housing Choice Vouchers Applicable Federal Award Number and Year – HCV2024 Eligibility Significant Deficiency in Internal Control over Compliance and Immaterial Instance of Noncompliance Criteria: The Program requires the Authority to obtain signatures on release forms from all persons in the household over 18 years of age. Condition: During our testing, we noted two files that were missing signatures from one of the household members over the age of 18. Cause: The Authority’s internal controls related to maintaining proper files were not operating as designed and was an oversight by staff. Effect: Weaknesses in internal control over compliance could result in the Authority failing to comply with eligibility requirements. Questioned Costs: N/A Context/Sampling: We tested 60 files from the population of over 250. Repeat Finding from Prior Year: No. Recommendation: We recommend that the Authority establish controls to ensure that all persons over 18 years of age sign the proper forms. View of Responsible Officials: Management agrees with the finding.

U.S. Department of Housing and Urban Development – CFDA #14.871 Housing Choice Vouchers Applicable Federal Award Number and Year – HCV2024 Eligibility Significant Deficiency in Internal Control over Compliance and Immaterial Instance of Noncompliance Criteria: The Authority is required to determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification in accordance with 24 CFR Part 5 Subpart F. Condition: During our testing, we noted one file that the incorrect income was calculated and used on the form, however, the error did not cause a change in the tenant assistance payment. Cause: The Authority’s internal controls related to maintaining proper files were not operating as designed and was an oversight by staff. Effect: Weaknesses in internal control over compliance could result in the Authority failing to comply with eligibility requirements. Questioned Costs: N/A Context/Sampling: We tested 60 files from the population of over 250. Repeat Finding from Prior Year: No. Recommendation: We recommend that the Authority establish controls to ensure that all the proper income is being calculated and used on the form to calculate HAP. View of Responsible Officials: Management agrees with the finding.

U.S. Department of Housing and Urban Development – CFDA #14.871 Housing Choice Vouchers Applicable Federal Award Number and Year – HCV2024 HQS Enforcement Significant Deficiency in Internal Control over Compliance Criteria: The Authority is to maintain a copy of all HQS inspections and re-inspections of failed inspections. Condition: During our testing, we noted one file that the passed re-inspection was not in the tenant file, however, we were able to substantiate that the re-inspection was completed and passed within the allowed time through their software system. Cause: The Authority’s internal controls related to maintaining proper files were not operating as designed and the inspection report was misplaced or filed incorrectly. Effect: Weaknesses in internal control over compliance could result in the Authority failing to comply with eligibility requirements. Questioned Costs: N/A Context/Sampling: We tested 26 files from the population of 152 total failed inspections during the fiscal year. Repeat Finding from Prior Year: No. Recommendation: We recommend that the Authority establish controls to ensure that all the proper documents be filed in the tenant files. View of Responsible Officials: Management agrees with the finding.

U.S. Department of Housing and Urban Development – CFDA #14.155 Mortgage Insurance for the Purchase or Refinance of Existing Multifamily Housing Projects Applicable Federal Award Number and Year – HUD loan under Section 207/223(f), HUD Project No. 101-11316 Allowable Costs/Allowable Activities Significant Deficiency in Internal Control over Compliance and Immaterial Instance of Noncompliance Criteria: As required by the HUD regulatory agreement, expenses charged to the project operations, whether for management agent services or other expenses, must be reasonable, typical, necessary and show a clear benefit to the tenants of the property. Condition: During our testing of cash disbursements, we identified unallowable expenditures charged to the project for staff treats and staff bonus pay. Cause: The Authority’s internal controls related to reviewing charges allocated to the project were not operating as designed and was an oversight by staff. Effect: The project was charged for and paid unallowable expenses. Questioned Costs: $344 Context/Sampling: A non-statistical sample of 60 disbursements were selected for testing, which accounted for $103,023 out of the total $2,889,933 disbursement population. Repeat Finding from Prior Year: No. Recommendation: We recommend that the Authority establish controls to ensure that all costs charged to the project are for allowable costs. View of Responsible Officials: Management agrees with the finding.

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 two out of forty participant households tested.

Questioned Costs: None.

Cause and Effect: The cause is the lack of file reviews for new staff hires. 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: The Authority has implemented the following in response to this finding: • All staff recently attended voucher training to understand the importance of and the process for file review and the documentation required, including rent reasonableness at move-in and as required. Staff will attend various HCV training throughout the year to ensure practical application. • Internal and third-party file reviews are and will continue to be conducted quarterly, to ensure file completeness, including rent reasonableness is completed properly and present in every move-in file and as required. If no rent reasonableness is in the file, SMHO will ensure one is completed, along with a clarification explaining any discrepancy. • SMHO will require managerial file review/approval for all new staff for the first six months of hire and will sign the check sheet for each file to indicate the review/approval has been completed.