Notes $149,048 in questioned costs
In an independent audit on the Northern Marianas Housing Corp., the Office of the Public Auditor identified certain deficiencies in its internal controls over compliance and found $149,048 in questioned costs.
According to the independent audit conducted by Deloitte Deloitte & Touche LLC on NMHC’s financial statements for the year that ended Sept. 30, 2019, they identified certain deficiencies in internal control over compliance that they consider to be material weaknesses and significant deficiencies.
The auditor, however, said their opinion is that the schedule of expenditures of federal awards to NMHC is fairly stated in all financial statements as a whole.
On Section 8 Housing Assistance Payments Program, of the 40 tenant files tested, aggregating $37,602 of a total population of $1,272,062, some of the deficiencies noted were $6,224 worth of questioned costs. The auditor said the statement of unemployment, affidavit of zero income, affidavit as to assets, and assets disposition were on file, but the forms were not filled, with no indication as to whether the forms are applicable to the tenant.
Another one (2%), the affidavit as to assets was not notarized. Another one (or 2%), the auditor said, the income reported by the applicant/tenant was not included in the Form HUD. The auditor said that, in these cases, NMHC did not effectively apply controls over compliance with applicable eligibility requirements. The effect is that NMHC is in noncompliance with applicable eligibility requirements, and questioned costs of $6,224 exist as the projected questioned cost exceeds the threshold.
The auditor recommended that NMHC should strengthen controls over compliance with applicable eligibility requirements by having a checklist and reviewing it against the tenant files to ascertain that all required forms and information are completed and filed.
With respect to other case of Section 8 Housing Assistance Payments Program that has questioned costs of $778, the auditor said that in one instance (or 2%), the inspector did not indicate overall housing quality inspection results in the inspection form. The auditor said they are unable to determine whether NMHC complied with the housing quality standards, whether any repairs are required and whether actions were taken by NMHC to address any deficiencies.
In another case (or 2%) with questioned cost of $7,120 under the same program, NMHC inspector reports for the following unit did not indicate if the deficiencies pertain to the tenant or NMHC or both.
Further, the auditor said, the work order did not indicate whether tenant deficiencies were corrected and charged. The effect is that NMHC is in noncompliance with applicable special tests and provisions requirements for housing quality standards. The auditor recommended that NMHC should strengthen controls over compliance with applicable special tests and provisions requirements for housing quality standards. The auditor said responsible personnel should monitor housing quality inspection procedures so that any deficiencies noted during inspections are documented and addressed.
With respect to Community Development Block Grants program on the area equipment and real property management, the auditor found that a reconciliation was not performed between NMHC’s records ($26,995) and the Fiscal Division’s records ($406,995), resulting in a variance of $380,000.
The auditor said one asset with a description of Valley Inn property in the Fiscal Division’s records costing $380,000 is missing in the master listing.
The auditor said inventory performed for four subrecipients indicated discrepancies in the count for one subrecipient. The auditor said information was provided that NMHC has followed up with the subrecipient as to resolution of the discrepancies, but no response was provided by the subrecipients. As a result, the auditor said, NMHC is in noncompliance with applicable equipment and real property management requirements. The auditor recommended that NMHC should establish and implement controls over compliance with applicable equipment and real property management requirements.
The auditor said responsible personnel should maintain and update equipment listings, as well as implement procedures for maintaining and safeguarding equipment against loss, damage or theft.
On the Home Investment Partnerships Program eligibility area, the auditor found deficiencies in 21 loan files tested for compliance with annual requirements. For one (or 5%) that has questioned costs of $20,000, the auditor said, the homeowner’s property insurance coverage was either not on file or not timely obtained. For two (or 10%), the auditor said, the homeowner’s property insurance coverage was timely obtained; however, the property was partially insured. The auditor said no questioned costs are presented for this as the insurance coverage limit was higher than the outstanding loan balance.
For two (or 10%), the auditor said, annual recertifications were either not performed or not timely performed during fiscal year 2019.
No questioned costs are presented as annual recertifications were subsequently performed.
For two (or 10%), the auditor said, the signed affidavit of principal residence signed by the borrower was not on file.