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HomeMy WebLinkAbout2016 - 67891 LHC Lansing Housing Commission - Fedral Awards Supplement Information June 30, 2016 Lansing Housing Commission Federal Awards Supplemental Information June 30, 2016 Lansing Housing Commission Contents Independent Auditor's Reports: Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance I Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 2-3 Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance 4-6 Schedule of Expenditures of Federal Awards 7 Notes to Schedule of Expenditures of Federal Awards 8 Schedule of Findings and Questioned Costs 9-17 Summary Schedule of Prior Audit Findings 18-19 Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance Independent Auditor's Report To the Board of Commissioners Lansing Housing Commission We have audited the financial statements of the business-type activities and the discretely presented component unit of Lansing Housing Commission (the "Commission") as of and for the year ended June 30, 2016 and the related notes to the financial statements, which collectively comprise the Commission's basic financial statements. We issued our report thereon dated January 9, 2017, which contained an unmodified opinion on the financial statements. Our audit was conducted for the purpose of forming opinions on the financial statement that collectively comprise the basic financial statements. We have not performed any procedures with respect to the audited financial statements subsequent to January 9, 2017. We did not audit the financial statements of the discretely presented component unit, which represent 100 percent of the assets of the discretely presented component unit and revenue of the discretely presented component unit. Those financial statements were audited by other auditors, whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for the discretely presented component unit, is based on the report of the other auditors. The accompanying schedule of expenditures of federal awards is presented for the purpose of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. 4 January 9, 2017 I Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor's Report To Management and the Board of Commissioners Lansing Housing Commission We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the business-type activities and the discretely presented component unit of Lansing Housing Commission (the "Commission") as of and for the year ended June 30, 2016 and related notes to the financial statements, which collectively comprise the Commission's basic financial statements, and have issued our report thereon dated January 9, 2017. Our report includes a reference to other auditors who audited the financial statements of the discretely presented component unit, as described in our report on Lansing Housing Commission's financial statements. This report does not include the results of the other auditors' testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Lansing Housing Commission's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Commission's internal control. Accordingly, we do not express an opinion on the effectiveness of the Commission's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses. 2 To Management and the Board of Commissioners Lansing Housing Commission A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Commission's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying schedule of findings and questioned costs as Findings 2016-001 and 2016-002 to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether Lansing Housing Commission's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Lansing Housing Commission's Responses to Findings Lansing Housing Commission's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. Lansing Housing Commission's responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Commission's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Commission's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. PLLC January 9, 2017 3 Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance Independent Auditor's Report To the Board of Commissioners Lansing Housing Commission Report on Compliance for Each Major Federal Program We have audited Lansing Housing Commission's (the "Commission") compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2016. Lansing Housing Commission's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of Lansing Housing Commission's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the "Uniform Guidance"). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Lansing Housing Commission's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Lansing Housing Commission's compliance. 4 To the Board of Commissioners Lansing Housing Commission Basis for Qualified Opinion on CFDA 14.871 Section 8 Housing Choice Vouchers As described in the accompanying schedule of findings and questioned costs, Lansing Housing Commission did not comply with requirements regarding CFDA 14.871 Section 8 Housing Choice Vouchers, as described in Findings 2016-004 and 2016-005, for eligibility and special tests and provisions. Compliance with such requirements is necessary, in our opinion, for Lansing Housing Commission to comply with the requirements applicable to that program. Unmodified Opinion on Each of the Other Major Federal Programs In our opinion, Lansing Housing Commission complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its other major federal programs identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs for the year ended June 30, 2016. Other Matters The results of our auditing procedures disclosed instances of noncompliance, which are required to be reported in accordance with OMB Uniform Guidance and which are described in the accompanying schedule of findings and questioned costs in Finding 2016-003. Our opinion on each major federal program is not modified with respect to these matters. Lansing Housing Commission's responses to the noncompliance findings identified in our audit are described in the accompanying schedule of findings and questioned costs and/or corrective action plan. Lansing Housing Commission's responses were not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on them. Report on Internal Control Over Compliance Management of Lansing Housing Commission is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Lansing Housing Commission's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Commission's internal control over compliance. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed identify all deficiencies in internal control over compliance that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses. 5 To the Board of Commissioners Lansing Housing Commission A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention of those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as Findings 2016-003, 2016-004, and 2016-005 to be material weaknesses. Lansing Housing Commission's responses to the internal control over compliance findings identified in our audit are described in the accompanying schedule of findings and questioned costs and/or corrective action plan. Lansing Housing Commission's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the responses. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. ! 2&011�1 P L L C Auburn Hills, MI January 9, 2017 6 Lansing Housing Commission Schedule of Expenditures of Federal Awards Year Ended June 30, 2016 Pass-through Entity Total Amount Identifying Provided to Federal Federal Agency/Pass-through Agency/Program Title CFDA Number Number Subrecipients Expenditures U.S.Department of Housing and Urban Development- Direct programs: Continuum of Care Program 14.267 n/a $ $ 311,531 Public and Indian Housing-Low-income Public Housing 14.850 n/a 3,441,431 Housing Voucher Cluster-Section 8 Housing Choice Vouchers 14.871 n/a 10,340,542 Public Housing Capital Fund Program 14.872 n/a 3,015,281 Total federal assistance $ 17,108,785 See Notes to Schedule of Expenditures of Federal Awards. 7 Lansing Housing Commission Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2016 Note 1 - Basis of Presentation The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal grant activity of Lansing Housing Commission under programs of the federal government for the year ended June 30, 2016. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the "Uniform Guidance"). Because the Schedule presents only a selected portion of the operations of Lansing Housing Commission, it is not intended to and does not present the financial position, changes in net position, or cash flows of Lansing Housing Commission. Note 2 - Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. Lansing Housing Commission has not elected to use the 10 percent de minimus indirect cost rate to recover indirect costs as allowed under the Uniform Guidance. 8 Lansing Housing Commission Schedule of Findings and Questioned Costs Year Ended June 30, 2016 Section 1 - Summary of Auditor's Results Financial Statements Type of auditor's report issued: Unmodified Internal control over financial reporting: • Material weakness(es) identified? X Yes No • Significant deficiency(ies) identified that are not considered to be material weaknesses? Yes X None reported Noncompliance material to financial statements noted? Yes X No Federal Awards Internal control over major programs: • Material weakness(es) identified? X Yes No • Significant deficiency(ies) identified that are not considered to be material weaknesses? Yes X None reported Type of auditor's report issued on compliance for major programs: Unmodified opinion on #14.850 Low-rent Public Housing and Development and Qualified opinion on #14.871 Section 8 Housing Choice Vouchers Any audit findings disclosed that are required to be reported in accordance with Section 2 CFR 200.516 (a)? X Yes No Identification of major programs: CFDA Numbers Name of Federal Program or Cluster 14.850 Low-rent Public Housing and Development 14.871 Section 8 Housing Choice Vouchers Dollar threshold used to distinguish between type A and type B programs: $750,000 Auditee qualified as low-risk auditee? Yes X No 9 Lansing Housing Commission Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2016 Section 11 - Financial Statement Audit Findings Reference Number Finding 2016-001 Finding Type - Material weakness (Repeat Criteria - Management should accurately record all adjustments for the financial Finding) statements in accordance with generally accepted accounting principals. Condition - Two journal entries were necessary to adjust various account balances in order to properly state them as of June 30, 2016. Context - One entry was identified by the auditor and posted by the Commission in order to properly reflect current year activity related to the net pension liability under GASB Statement No. 68. The adjustment affected the deferred inflows and deferred outflows related to pensions as well as the related expenses. The Commission had not utilized the appropriate figures from the GASB Statement No. 68 actuarial valuation to perform the calculation of the net pension liability activity. Another entry was identified by the auditor and posted by the Commission in order to properly reflect the net other postemployment benefit (OPEB) obligation under GASB Statement No. 45. The adjustment affected the net OPEB obligation liability as well as the related expense. The Commission had not reflected new employees properly when performing the initial calculation. Cause - For certain financial statement accounts, the Commission did not have a system in place to ensure that year-end balances agree to detail and are properly stated. Effect - As a result of this transactions not being properly recorded, several account balances required adjustment as of June 30, 2016. The financial statements were misstated prior to the auditor proposing the entries. Recommendation - The Commission should develop controls to ensure that all appropriate journal entries are made so that ending balances are correct. Views of Responsible Officials and Planned Corrective Actions - BDO, the Commission's fee accountant, and the Commission are confident that the misunderstanding regarding the two journal entries related to pension and OPEB that were required to fairly state various account balances as of June 30, 2016 have been resolved going forward based on year-end audit discussions with Plante & Moran, PLLC. The Commission through BDO has put a system into place to ensure year end financial statement balances are properly stated. 10 Lansing Housing Commission Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2016 Section 11 - Financial Statement Audit Findings (Continued) Reference Number Finding 2016-002 Finding Type - Material weakness Criteria - A combination of preventive and detective controls should be in place to reduce the opportunity for unauthorized transactions. Condition -A preventive control is lacking surrounding bank transfers. Context - Under the current control structure, wire transfers performed via online banking require a second online banking user's authorization; however, an account signer on a bank account can unilaterally send a wire transfer in person at the bank without the approval or notification of another signer on the account. Cause - A control does not exist at the bank to require another signer's authorization when transfers are done in person at the bank. Effect - There is a risk that a single account signer could authorize a wire transfer from the Commission's accounts if the wire is initiated in person at the bank. Recommendation - The Commission should work with the bank to identify other controls that could be implemented, such as a flag on the Commission's accounts or a notification to another signer, if such a transfer is initiated in person at the bank. Views of Responsible Officials and Planned Corrective Actions - The Commission has discussed the options for resolving this finding with Chase Bank and determined a flag can be placed on the account. However, the bank also acknowledged that a flag will not ensure the single signer will not have access. The flag directs a teller to make a telephone call which may or may not happen. As such, we have informed the entire board of this possibility and the safeguards in place which are: (a.) the principal signers have signed a pledge not to make a wire transfer, (b.) there is a fidelity bond in place to cover any losses due to fraud by the signers, (c.) staff and the director will review transactions daily to ensure no wire transfers have taken place and the Commission will initiate appropriate actions if such activity occurs, and (d.) the bank has video available that would show who initiated the transaction. II Lansing Housing Commission Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2016 Section 111 - Federal Program Audit Findings Reference Number Finding 2016-003 CFDA number, Federal Agency, and Program Name - U.S. Department of Housing and Urban Development - Direct programs - Low-rent Public Housing and Development - 14.850 Federal Award Identification Number and Year - Not applicable Pass-through Entity - Not applicable Finding Type - Material weakness in internal controls over eligibility and material noncompliance with eligibility requirements Repeat Finding - Yes; 2015-005 Criteria - Under 24 CFR 5.230, 5.601, 5.609, 960.206, 960.208, 960.253, 960.255, 960.257, and 960.259, the Commission must: a. As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the Commission to verify income eligibility. b. For both family income examinations and re-examinations, obtain and document in the family file third-party verification of: (1) reported family annual income, (2) the value of assets, (3) expenses related to deductions from annual income, and (4) other factors that affect the determination of adjusted income or income-based rent. c. Determine income eligibility and calculate the tenant's rent payment using documentation from third-party verification. d. Select tenants from the public housing waiting list (see Special Tests and Provisions - Public Housing Waiting List) e. Re-examine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third-party verification Condition - Some participant files tested did not include complete information to support participant eligibility and/or the level of benefits provided. Questioned Costs - Unknown Identification of How Questioned Costs Were Computed - Not applicable as questioned costs could not be computed 12 Lansing Housing Commission Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2016 Section 111 - Federal Program Audit Findings (Continued) Reference Number Finding 2016-003 Context - 60 tenant files were tested and the results are as follows: (Con't) • Three tenant files included income at the incorrect amount on HUD-50058 due to improper determination of income based on third-party detail. • One tenant file did not have a completed annual recertification performed during the fiscal year. • One tenant file could not be located and the annual recertification performed during the fiscal year had to be recreated. • One tenant file did not include proper verification of the value of assets. • One tenant file included the utility allowance at the incorrect amount on HUD- 50058. Cause and Effect - The Commission is not completely following the policies and procedures in place to ensure proper compliance with regard to tenant eligibility requirements. The Commission could be charging the incorrect amount of rent or could be housing ineligible tenants. Recommendation - The Commission should establish procedures to ensure participant eligibility is documented and complete tenant files are maintained. Periodic internal review of tenant files would help identify errors in a timely manner. Views of Responsible Officials and Planned Corrective Actions - The Commission shall strengthen asset management file oversight, increase the number of file reviews conducted, and establish and maintain a file quality control process to improve regulatory compliance. 13 Lansing Housing Commission Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2016 Section 111 - Federal Program Audit Findings (Continued) Reference Number Finding 2016-004 CFDA Number, Federal Agency, and Program Name - U.S. Department of Housing and Urban Development - Direct programs - Section 8 Housing Choice Vouchers - 14.871 Federal Award Identification Number and Year - Not applicable Pass-through Entity - Not applicable Finding Type - Material weakness in internal controls over eligibility and material noncompliance with eligibility Repeat Finding - Yes; 2015-004 and 2014-005 Criteria - Under the Housing Choice Voucher Program, the Commission accepts applications for rental assistance, selects applicants for admission, and issues family vouchers confirming eligibility. The Commission pays the owner of the unit that the family leases a portion of the rent (housing assistance payment - HAP) on behalf of the family. Under 24 CFR 5.230, 5.609, and 982.516, the Commission must verify and maintain documents supporting family income eligibility. 24 CFR 982.516 (f) requires PHAs to establish procedures that are appropriate and necessary to ensure that income data provided by the applicant or participant families is accurate and complete. Additionally, under 24 CFR 982.503, the Commission must base the subsidy amount on the payment standard that is set by the PHA between 90 percent and 110 percent of the fair market rent and if the payment standard is not between this percentage, HUD approval must be obtained. Condition - Some participant files tested did not include complete information to support eligibility. Questioned Costs - Unknown Identification of How Questioned Costs Were Computed - Not applicable as questioned costs could not be computed 14 Lansing Housing Commission Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2016 Section 111 - Federal Program Audit Findings (Continued) Reference Number Finding 2016-004 Context - 60 tenant files were tested, and the results were as follows: (Con't) Five tenant files used a payment standard that was not within the 90 percent and 110 percent threshold of the fair market rate set by HUD and the Commission did not have the proper board approval, as required by HUD. Three tenant files used a payment standard on HUD-50058 that differed from the board-approved payment standard. Three tenant files included income at the incorrect amount on HUD-50058 due to improper determination of income based on third-party detail. Cause and Effect - The Commission is not completely following the policies and procedures it has in place to ensure proper and timely compliance with regard to tenant rent calculations or eligibility. The Commission could be charging the incorrect amount of rent or could be housing ineligible tenants. Also, the Commission should be following the payment standard that is between 90 percent and 110 percent of the fair market rent or obtain the proper HUD approval. Recommendation - The Commission should establish procedures to ensure participant eligibility is documented, complete tenant files are maintained, and the correct payment standard is being followed. Periodic internal review of tenant files would help identify errors/omissions in a timely manner. Views of Responsible Officials and Planned Corrective Actions - The Commission has established procedures to ensure participant eligibility is documented, complete tenant files are maintained, and the correct payment standard is utilized. The Commission adopted a standard operating procedure in 2016 which standardizes Housing Choice Voucher file review format and volume. Additionally, the board approved the current (2016) 1 10 percent of FMR payment standard and will approve future actions. Some of the files reviewed for the 2016 audit have not been recertified since the board approved the policy in 2016; as such, they continue to reflect the utility allowance noted in the prior year audit. 15 Lansing Housing Commission Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2016 Section 111 - Federal Program Audit Findings (Continued) Reference Number Finding 2016-005 CFDA Number, Federal Agency, and Program Name - U.S. Department of Housing and Urban Development - Direct programs - Section 8 Housing Choice Vouchers - 14.871 Federal Award Identification Number and Year - Not applicable Pass-through Entity - Not applicable Finding Type - Material weakness in internal controls over special tests and provisions and material noncompliance with special tests and provisions. Repeat Finding - No Criteria - Under 24 CFR section 982.517, the Commission must maintain an up- to-date utility allowance schedule. An update is required if there is a rate change of 10 percent or more for a utility category. Section 242 of the 2014 Appropriations Act (the "Act") established a cap on the utility allowance for families leasing oversized units. The Act limits the utility allowance payment to the family unit size for which the voucher is issued, irrespective of the size of the unit rented by the family. Condition - Lansing Housing Commission was not adhering to the requirement in Section 242 of the 2014 Appropriations Act for the full fiscal year or the utility allowance amount was not properly supported. Questioned Costs - Unknown Identification of How Questioned Costs Were Computed - Not applicable as questioned costs could not be computed Context - 60 tenant files were tested, and the results were as follows: • 14 tenant files included a utility allowance based on the greater of the number of bedrooms or family unit size, rather than the lesser of these two factors. • One tenant file included a utility allowance amount on HUD-50058 that did not agree to the calculated amount on the utility allowance schedule. Cause and Effect - The Commission is not completely following the policies and procedures it has in place to ensure proper and timely compliance with regard to tenant utility allowance calculations. The Commission could be charging the incorrect amount of rent due to the improper utility allowances or information not agreeing to the HUD-50058. 16 Lansing Housing Commission Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2016 Section 111 - Federal Program Audit Findings (Continued) Reference Number Finding 2016-005 Recommendation - The Commission should strengthen controls over the (Con't) completion of HUD-50058 form as well as ensuring proper compliance with regard to tenant utility allowance calculation to ensure correct housing assistance payments to the owners. Views of Responsible Officials and Planned Corrective Actions - The Commission established procedures to ensure the correct payment utility standard is utilized. The board approved the current (2016) utility allowance and reviewed the methodology for determining the proper utility allowance. Future utility allowances will also be subject to board approval. Some of the files reviewed for the 2016 audit have not been recertified since the board approved the policy in 2016. As such, they continue to reflect the utility allowance noted in the prior year audit. 17 Lansing Housing Commission Summary Schedule of Prior Audit Findings Year Ended June 30, 2016 Fiscal Year in Which the Prior Year Finding Planned Corrective Finding Initially Federal Program,CFDA Status/Partial Corrective Action (if finding Number Occurred Number, and Name Original Finding Description Action (as applicable) not corrected) 2015-001 2014 Not applicable The Commission failed to implement Cleared Cleared appropriate key accounting and control procedures. Bank reconciliations were not reconciled in a timely matter throughout the year. Subsidiary ledgers were not reconciled to the general ledger in a timely matter throughout the year. Support for transactions could not be located or was not maintained for an appropriate period of time to be available for review during the audit process.There were incompatible duties performed due to a lack of segregation of duties, both in finance and in the human resource department. Financial records for the year ended June 30, 2015 were not reconciled and ready for the audit process until October 2015. 2015-002 2015 Not applicable A journal entry was necessary to adjust Repeat Finding 2016-001 See Finding various account balances in order to 2016-001 properly state them as of June 30, 2015. 2015-003 2014 Not applicable The documentation and controls around the Cleared Cleared IT system are lacking. IT controls are either missing or the implementation is unable to be supported. 2015-004 2014 U.S. Department of Housing Some participant files tested did not include Repeat Finding 2016-004 See Finding and Urban Development- complete information to support eligibility. 2016-004 Direct programs-Section 8 Housing Choice Vouchers- 14.871 18 Lansing Housing Commission Summary Schedule of Prior Audit Findings (Continued) Year Ended June 30, 2016 Fiscal Year in Which the Prior Year Finding Planned Corrective Finding Initially Federal Program,CFDA Status/Partial Corrective Action (if finding Number Occurred Number, and Name Original Finding Description Action (as applicable) not corrected) 2015-005 2014 U.S. Department of Housing Some participant files tested did not include Repeat Finding 2016-003 See Finding and Urban Development- complete information to support participant 2016-003 Direct programs- Low-rent eligibility and/or the level of benefits Public Housing and provided. Development- 14.850 2015-006 2014 U.S. Department of Housing The Commission was unable to provide Cleared Cleared and Urban Development- adequate detail to support the amounts Direct programs- Low-rent reported on the HUD-52722 and HUD- Public Housing and 52723 forms. Development- 14.850 2015-007 2014 U.S. Department of Housing The Commission is not depositing low-rent Cleared Cleared and Urban Development- public housing and housing choice voucher Direct programs: funds into interest-bearing accounts as Low-rent Public Housing required by its depository agreements. and Development- 14.850 Section 8 Housing Choice Vouchers- 14.871 19