{"database": "mytown-research", "table": "audit_findings", "rows": [[20, "wa-sao", "1021046", "2017-001", null, "WA", "Kitsap County Consolidated Housing Authority", "Housing Authority", "0346", null, "not_municipal", "Washington State Auditor's Office", "Financial and Federal audit \u2014 Kitsap County Consolidated Housing Authority", "Financial and Federal", 2017, "2016-07-01", "2017-06-30", "2018-12-24", "federal_award_compliance", "material_weakness", 34714.0, "Questioned Cost Amount: $34,714", "The Housing Authority did not have adequate internal controls to ensure it met allowable costs/cost principles requirements for its Rural Self-Help Technical Assistance Program. CFDA Number and Title: 10.420 Rural Self-Help Housing Technical Assistance Federal Grantor Name: US Department of Agriculture \u2013 Rural Housing Service Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-th", "Description of Condition \nThe Housing Authority spent $1,204,013 in Rural Self -Help Technical Assistance \nfunds in fiscal year 2017. The objective of this program is to help low- and very-low-\nincome individuals and their families to build homes in rural areas by the self -help \nmethod. \nThe Housing Authority\u2019s program expenditures consist of both direct and indirect \ncosts. The program was reimbursed $514,282 (43 percent of program expenses) for \nindirect costs. Indirect costs charged are based on an indirect cost allocation plan, \nincluding several different allocations of administrative payroll, building, vehicle, \nequipment and training costs. \nThe Housing Authority did not have adequate internal controls to ensure indirect cost \nallocations met federal grant requirements for allowable costs. \nWe consider this deficiency in internal controls to be a material weakness. \nThis issue was not reported as a finding in the prior audit. \nWashington State Auditor's Office\nCause of Condition \nAlthough current staff were not involved with the creation of the Authority\u2019s indirect \ncost allocation plan, staff did not update the plan in accordance with Uniform \nGuidance. Additionally, Authority management did not adequately monitor and \nreview the plan to ensure it still fit the Housing Authority\u2019s changing circumstances. \nEffect of Condition and Questioned Costs \nThe Housing Authority\u2019s lack of internal controls resulted in noncompliance with \nfederal allowable cost requirements for indirect costs. We noted the following: \n\uf0b7 The Housing Authority\u2019s Agency -Wide Indirect Overhead cost pool, the \nlargest of the Authority\u2019s indirect cost allocation pools, did not allocate \nindirect costs equitably to all programs. We identified seven programs that did \nnot have indirect costs from this pool allocated to them. However, indirect \ncosts related to these programs were not removed from the pool, they were \nsimply allocated to other programs. \n\uf0b7 Executive Director salary and benefits were included in the amount allocated, \nwhich is unallowable. This resulted in known questioned costs of $34,714. \n\uf0b7 Indirect costs allocated from the Agency -Wide Indirect Overhead cost pool \nover allocated actual costs. \n\uf0b7 Employee leave was charged directly to the grant rather than equitably \nallocated to all areas worked. \n\uf0b7 An allocation was made that was not included in the indirect cost allocation \nplan which is therefore unallowable. This resulted in estimated questioned \ncosts of $33,497. \nBased on the above control deficiencies and noncomplianc e, we identified total \nknown questioned costs of $34,714 and total estimated questioned costs of $33,497. \nHowever, because of the complexity of the indirect cost allocation plan and the other \ndeficiencies noted above, additional questioned costs likely exi st that have not been \nidentified. \nRecommendation \nWe recommend the Housing Authority strengthen internal controls to ensure costs \ncharged to its federal program meet allowable cost requirements. Specifically, the \nHousing Authority should: \n\uf0b7 Provide training a nd other resources to its staff members to ensure they \nunderstand federal regulations \nWashington State Auditor's Office\n\uf0b7 Modify how employee payroll and benefits are charged to federal programs \nto meet federal requirements \n\uf0b7 Improve documentation, methodology and support for allocation of ind irect \ncosts and re-evaluate these allocations annually \nAdditionally, the Housing Authority should contact the United States Department of \nAgriculture Rural Development to determine a reasonable basis for allocating indirect \ncosts and identify and resolve any additional questioned costs. \nHousing Authority\u2019s Response \nHousing Kitsap recognizes the importance of correctly accounting for and \ndistributing indirect overhead cost pool allocations and appreciates the hard work \nperformed by the State Auditor\u2019s Office. Prior to the audit, our office had identified \nthe indirect overhead cost pool and allocation process as problematic. Corrective \naction was taken which includes the following: \n\uf0b7 Worked with Rural Community Assistance Corporation (RCAC) as directed \nby the United State Department of Agriculture \u2013 Rural Development (RD), to \nidentify and analyze solutions that meet USDA and 523 Technical Assistance \n(TA) grant requirements. \n\uf0b7 Determined that the agency meets the conditions of 200.414 (f) for a 10% De \nMinimis indirect cost rate by: \n\uf0b7 Never having received a negotiated indirect cost rate; \n\uf0b7 State or local governmental department agency that receives less than \n$35 million in direct federal funding; \n\uf0b7 A Cost Allocation Plan is not required by the Department of Housing \nand Urban Development (HUD); \n\uf0b7 Documented the process and elected to use the 10% De Minimis indirect cost \nrate as allowed by 200.415 (f) to pay for overhead costs that are not directly \ncharged to federal awards. Per 2 CFR Section 200.403 costs will be \nconsistently charged as either direct or indirect costs. \n\uf0b7 Eliminated the indirect overhead cost pool and cost allocation process. \nWe do not concur that the Executive Director\u2019s salary and benefits are unallowable. \nPer RCAC, the RD\u2019s designated technical and compliance advisor, the salary and \nbenefits of an Executive Directors are allowable and are used by most, if not all other \n523 TA grant recipients, referencing Uniform Guidance of Parts 400, 415, 416, 418 \nand 422 to Title 2 of the CFR. \nWashington State Auditor's Office\nAuditor\u2019s Remarks \nWe thank the Authority for its cooperation and assistance throughout the a udit, and \nthe steps it is taking to address these issues. Federal law states that salaries and \nexpenses of the chief executive of a local government are not allowed to be charged \nto the grant. The Executive Director is the chief executive of the Housing Authority. \nTherefore, under Uniform Guidance, his salary must not be charged. We confirmed \nthis with the awarding agency, USDA. \nThe Housing Authority cited parts 400, 415, 416, 418 and 422 of Title 2 in their \nresponse. While these CFR parts may be applica ble to Housing Kitsap\u2019s Rural Self -\nHelp Technical Assistance Grant, they do not apply to our audit work and resulting \nfinding, which is grounded in Title 2 part 200 section 444 . We reaffirm our audit \nfinding and will review the status of the Authority\u2019s corrective action during our next \naudit. \nApplicable Laws and Regulations \nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 303, Internal Controls, establishes internal control \nrequirements for management of Federal awards to non-Federal entities. \nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Princi ples, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 516, Audit findings, establishes reporting requirements \nfor audit findings. \nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Princ iples, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 444, General Costs of Government, establishes \nunallowable general costs of a government. \nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 408, Limitation on Allowance of Costs , establishes \nguidance on conforming to any limitations or exclusions set forth in the terms and \nconditions of the Federal award, or other governing regulations as to types or amounts \nof cost items. \nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 40 5, Allowable Costs, establishes guidance for which \ncosts are allocable. \nWashington State Auditor's Office\nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 404 , Reasonable Costs , establishes guidance on \nreasonableness of costs. \nTitle 2 U.S Code of Federal Regulation (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Findings \n(Uniform Guidance), Section 403, Factors Affecting Allowability of Costs , \nestablishes guidance on cost principles that affect the allowability of costs. \nThe American Institute of Certified Public Accountants defines significant \ndeficiencies and material weaknesses in its Codification of St atements on Auditing \nStandards, section 935, paragraph 11. \nRural Development Part 1944 - Housing, Subpart I \u2013 Self-Help Technical Assistance \nGrants, Section 1944.406 Prohibited Use of Grant Funds , provides guidance on \nprohibited uses of grant funds. \nRural Development Part 1944 \u2013Housing, Subpart I \u2013 Self Help Technical Assistance \nGrants, Section 1944.405 Authorized Use of Grant Funds , provides guidance on \nauthorized use of grant funds. \nRural Development Part 194 \u2013 Housing, Subpart I \u2013 Self-Help Technical Assistance \nGrants, Section 1944-410, Processing pre-applications, applications, and competing \ngrant dockets, provides guidance on information required for grant pre -application, \napplication and grant docket including an indirect or direct cost policy and proposed \nindirect cost rate developed in accordance with 7 CFR Part 3015 and Part 3016. \n \n \nWashington State Auditor's Office", "https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1021046&isFinding=false&sp=false", "2026-07-30 13:24:54"]], "columns": ["rowid", "source", "report_number", "finding_number", "muni_id", "state", "entity_name", "entity_type", "entity_ext_id", "place_geoid", "match_method", "auditor", "report_title", "audit_type", "fiscal_year", "period_start", "period_end", "published_date", "finding_category", "severity", "questioned_cost", "cost_basis", "finding_title", "finding_text", "report_url", "fetched_at"], "primary_keys": ["rowid"], "primary_key_values": ["20"], "units": {}, "query_ms": 0.58548100059852, "source": "MyTown", "source_url": "https://mytown.theboringparts.com", "license": "CC BY 4.0", "license_url": "https://creativecommons.org/licenses/by/4.0/"}