Audit 303627

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Housing Quality Standards (HQS) Inspections Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: The South Carolina State Housing Finance and Development Authority (the Authority) must inspect a unit leased to a family at least annually to determine if the unit meets HQS and the Authority must conduct quality control (QC) re-inspections (24 CFR sections 982.405(a) and 982.405(b)). Condition: The Authority did not perform HQS and QC inspections in accordance with program compliance requirements. Questioned costs: Unable to determine. Context: A sample of 40 units found that 3 units that were not inspected timely. The Authority did not perform QC inspections during the fiscal year. Cause: HQS inspections were not completed within the required timeframe for 3 units. The Authority did not perform QC inspections during the fiscal year. Effect: The Authority is not in compliance with HQS and QC inspection requirements. Repeat Finding: Yes, see finding 2022-001. Recommendation: We recommend the Authority implements controls to ensure that required HQS and QC inspections are completed timely. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Housing Quality Standards (HQS) Inspections Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: The South Carolina State Housing Finance and Development Authority (the Authority) must inspect a unit leased to a family at least annually to determine if the unit meets HQS and the Authority must conduct quality control (QC) re-inspections (24 CFR sections 982.405(a) and 982.405(b)). Condition: The Authority did not perform HQS and QC inspections in accordance with program compliance requirements. Questioned costs: Unable to determine. Context: A sample of 40 units found that 3 units that were not inspected timely. The Authority did not perform QC inspections during the fiscal year. Cause: HQS inspections were not completed within the required timeframe for 3 units. The Authority did not perform QC inspections during the fiscal year. Effect: The Authority is not in compliance with HQS and QC inspection requirements. Repeat Finding: Yes, see finding 2022-001. Recommendation: We recommend the Authority implements controls to ensure that required HQS and QC inspections are completed timely. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Housing Quality Standards (HQS) Inspections Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: The South Carolina State Housing Finance and Development Authority (the Authority) must inspect a unit leased to a family at least annually to determine if the unit meets HQS and the Authority must conduct quality control (QC) re-inspections (24 CFR sections 982.405(a) and 982.405(b)). Condition: The Authority did not perform HQS and QC inspections in accordance with program compliance requirements. Questioned costs: Unable to determine. Context: A sample of 40 units found that 3 units that were not inspected timely. The Authority did not perform QC inspections during the fiscal year. Cause: HQS inspections were not completed within the required timeframe for 3 units. The Authority did not perform QC inspections during the fiscal year. Effect: The Authority is not in compliance with HQS and QC inspection requirements. Repeat Finding: Yes, see finding 2022-001. Recommendation: We recommend the Authority implements controls to ensure that required HQS and QC inspections are completed timely. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – HQS Enforcement Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: For units under Housing Assistance Payment (HAP) contract that fail to meet HQS, the Authority must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified Authority-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the Authority must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as a result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the Authority must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). Condition: The Authority did not require HQS deficiencies to be corrected within the required timeframe. The Authority did not abate units that failed to correct HQS deficiencies within the required timeframe. Questioned costs: $7,698 Context: Exceptions were noted in 28 out of 40 failed inspections:  In 23 instances, the Authority did not reinspect the unit within the required timeframe.  In 8 instances, the Authority did not abate the unit for the required timeframe.  In 2 instances, the Authority did not take the proper steps to enforce family obligations.  In 13 instances, the Authority did not notify the tenant of the inspection results within the required timeframe.  In 2 instances, the Authority was unable to provide the inspection documentation. Cause: The Authority did not reinspect or abate units timely. Effect: The Authority is not in compliance with HQS enforcement requirements. Repeat Finding: Yes, see finding 2022-002. Recommendation: We recommend the Authority implements controls to ensure that the Authority requires HQS deficiencies to be corrected within the timeframe set forth by 2 CFR section 982.404(a). We recommend the Authority implements controls to ensure abatement is timely for units that do not correct the cited HQS deficiencies within the required timeframe. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – HQS Enforcement Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: For units under Housing Assistance Payment (HAP) contract that fail to meet HQS, the Authority must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified Authority-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the Authority must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as a result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the Authority must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). Condition: The Authority did not require HQS deficiencies to be corrected within the required timeframe. The Authority did not abate units that failed to correct HQS deficiencies within the required timeframe. Questioned costs: $7,698 Context: Exceptions were noted in 28 out of 40 failed inspections:  In 23 instances, the Authority did not reinspect the unit within the required timeframe.  In 8 instances, the Authority did not abate the unit for the required timeframe.  In 2 instances, the Authority did not take the proper steps to enforce family obligations.  In 13 instances, the Authority did not notify the tenant of the inspection results within the required timeframe.  In 2 instances, the Authority was unable to provide the inspection documentation. Cause: The Authority did not reinspect or abate units timely. Effect: The Authority is not in compliance with HQS enforcement requirements. Repeat Finding: Yes, see finding 2022-002. Recommendation: We recommend the Authority implements controls to ensure that the Authority requires HQS deficiencies to be corrected within the timeframe set forth by 2 CFR section 982.404(a). We recommend the Authority implements controls to ensure abatement is timely for units that do not correct the cited HQS deficiencies within the required timeframe. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – HQS Enforcement Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: For units under Housing Assistance Payment (HAP) contract that fail to meet HQS, the Authority must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified Authority-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the Authority must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as a result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the Authority must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). Condition: The Authority did not require HQS deficiencies to be corrected within the required timeframe. The Authority did not abate units that failed to correct HQS deficiencies within the required timeframe. Questioned costs: $7,698 Context: Exceptions were noted in 28 out of 40 failed inspections:  In 23 instances, the Authority did not reinspect the unit within the required timeframe.  In 8 instances, the Authority did not abate the unit for the required timeframe.  In 2 instances, the Authority did not take the proper steps to enforce family obligations.  In 13 instances, the Authority did not notify the tenant of the inspection results within the required timeframe.  In 2 instances, the Authority was unable to provide the inspection documentation. Cause: The Authority did not reinspect or abate units timely. Effect: The Authority is not in compliance with HQS enforcement requirements. Repeat Finding: Yes, see finding 2022-002. Recommendation: We recommend the Authority implements controls to ensure that the Authority requires HQS deficiencies to be corrected within the timeframe set forth by 2 CFR section 982.404(a). We recommend the Authority implements controls to ensure abatement is timely for units that do not correct the cited HQS deficiencies within the required timeframe. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Reasonable Rent Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must determine that the rent to 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 five 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) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: The Authority did not perform rent reasonableness procedures in accordance with program compliance requirements. Questioned costs: Unable to determine. Context: During the testing of the Housing Choice Voucher Program tenant files, certain special provision compliance deficiencies were noted in 8 out of 25 new tenant files and 6 out of 40 contract rent change files as summarized below:  8 instances where the rent reasonableness for a new tenant was not performed prior to the effective date.  2 instances where the rent reasonableness determination form for a new tenant was unable to be provided for review.  5 instances where the rent reasonableness for a rent change was not performed prior to the effective date.  1 instance where a rent reasonableness review for a rent change was not performed. Cause: The Authority failed to determine the rent reasonable before the tenants’ effective date and/or failed to contain proper documentation of the information performed. Effect: The Authority is not in compliance with federal regulations regarding the determination of reasonable rent. HAP payments could be based on unreasonable rents. Repeat Finding: Yes, see finding 2022-004. Recommendation: We recommend that the Authority designate an individual to review tenant files to determine if a rent reasonableness has been performed. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Reasonable Rent Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must determine that the rent to 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 five 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) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: The Authority did not perform rent reasonableness procedures in accordance with program compliance requirements. Questioned costs: Unable to determine. Context: During the testing of the Housing Choice Voucher Program tenant files, certain special provision compliance deficiencies were noted in 8 out of 25 new tenant files and 6 out of 40 contract rent change files as summarized below:  8 instances where the rent reasonableness for a new tenant was not performed prior to the effective date.  2 instances where the rent reasonableness determination form for a new tenant was unable to be provided for review.  5 instances where the rent reasonableness for a rent change was not performed prior to the effective date.  1 instance where a rent reasonableness review for a rent change was not performed. Cause: The Authority failed to determine the rent reasonable before the tenants’ effective date and/or failed to contain proper documentation of the information performed. Effect: The Authority is not in compliance with federal regulations regarding the determination of reasonable rent. HAP payments could be based on unreasonable rents. Repeat Finding: Yes, see finding 2022-004. Recommendation: We recommend that the Authority designate an individual to review tenant files to determine if a rent reasonableness has been performed. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Reasonable Rent Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must determine that the rent to 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 five 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) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: The Authority did not perform rent reasonableness procedures in accordance with program compliance requirements. Questioned costs: Unable to determine. Context: During the testing of the Housing Choice Voucher Program tenant files, certain special provision compliance deficiencies were noted in 8 out of 25 new tenant files and 6 out of 40 contract rent change files as summarized below:  8 instances where the rent reasonableness for a new tenant was not performed prior to the effective date.  2 instances where the rent reasonableness determination form for a new tenant was unable to be provided for review.  5 instances where the rent reasonableness for a rent change was not performed prior to the effective date.  1 instance where a rent reasonableness review for a rent change was not performed. Cause: The Authority failed to determine the rent reasonable before the tenants’ effective date and/or failed to contain proper documentation of the information performed. Effect: The Authority is not in compliance with federal regulations regarding the determination of reasonable rent. HAP payments could be based on unreasonable rents. Repeat Finding: Yes, see finding 2022-004. Recommendation: We recommend that the Authority designate an individual to review tenant files to determine if a rent reasonableness has been performed. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Emergency Rental Assistance (ERA) Assistance Listing Number: 21.023 Federal Award Identification Number and Year: ERAE0406 and ERAE0407 - 2022 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Reporting Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: Monthly and quarterly reports are required to be submitted in accordance with Treasury guidance beginning in the first quarter of 2021 through September of 2022 for ERA1 and through September of 2025 for ERA 2. The monthly and quarterly reports are required to be submitted by the 15th of the following month. Condition: The Authority did not maintain documentation to support reported amounts and documentation of the internal control over compliance was not maintained. Questioned costs: Unable to determine. Context: A sample of 4 reports were unsupported and did not include documentation of review and approval. Cause: Documentation was not maintained that supported the amounts reported. Effect: The Authority is not in compliance with ERA reporting requirements. Repeat Finding: Yes, see finding 2022-005. Recommendation: We recommend the Authority implements controls to ensure that documentation is maintained to support amounts reported. Review and approval of the amounts reported to Treasury should be documented. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Emergency Rental Assistance (ERA) Assistance Listing Number: 21.023 Federal Award Identification Number and Year: ERAE0406 and ERAE0407 - 2022 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Period of Performance Type of Finding:  Material Weakness in Internal Control over Compliance Criteria or specific requirement: The period of performance for the Emergency Rental Assistance program is defined in 2 CFR 200.344(d) and requires that all grant funds be expended within the approved period of performance. Condition: The Authority did not maintain support to document that expenses charged to the grant at the period of performance end were properly approved to be charged to the program. Questioned costs: None. Context: A sample of 40 expenses charged to the grant after the period of performance identified that 29 of 40 expenses lacked evidence that an internal control over compliance was present. Cause: The Authority did not maintain support to properly evidence an internal control over compliance. Effect: The Authority is not meeting the Uniform Guidance requirements for internal controls over compliance with ERA reporting requirements. Repeat Finding: No. Recommendation: We recommend the Authority implements an internal control over compliance to evidence the expenses are approved to be charged to the grant. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Depository Agreement Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: Authorities are required to enter into depository agreements with their financial institutions in the form required by the U.S. Department of Housing and Urban Development (HUD). The agreements serve as safeguards for federal funds and provide third party rights to HUD. Among the terms in many agreements are requirements for funds to be placed in an interest-bearing account (24 CFR section 982.156). Condition: The Authority does not have a depository agreement in place with HUD. Housing Voucher Cluster funds are not deposited in a separate interest-bearing account. Questioned costs: Unable to determine. Context: A depository agreement has not been executed. Cause: The Authority’s Housing Voucher Cluster funds are not deposited in a separate interest-bearing account. Effect: The Authority is not in compliance with depository agreement requirements. Repeat Finding: Yes, see finding 2022-003. Recommendation: We recommend that the Authority sets up a separate interest-bearing account and executes a depository agreement with their financial institution and HUD; alternatively, we recommend that the Authority obtains a waiver from this requirement if local regulation prohibits the Authority from following 24 CFR section 982.156. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Depository Agreement Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: Authorities are required to enter into depository agreements with their financial institutions in the form required by the U.S. Department of Housing and Urban Development (HUD). The agreements serve as safeguards for federal funds and provide third party rights to HUD. Among the terms in many agreements are requirements for funds to be placed in an interest-bearing account (24 CFR section 982.156). Condition: The Authority does not have a depository agreement in place with HUD. Housing Voucher Cluster funds are not deposited in a separate interest-bearing account. Questioned costs: Unable to determine. Context: A depository agreement has not been executed. Cause: The Authority’s Housing Voucher Cluster funds are not deposited in a separate interest-bearing account. Effect: The Authority is not in compliance with depository agreement requirements. Repeat Finding: Yes, see finding 2022-003. Recommendation: We recommend that the Authority sets up a separate interest-bearing account and executes a depository agreement with their financial institution and HUD; alternatively, we recommend that the Authority obtains a waiver from this requirement if local regulation prohibits the Authority from following 24 CFR section 982.156. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Depository Agreement Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: Authorities are required to enter into depository agreements with their financial institutions in the form required by the U.S. Department of Housing and Urban Development (HUD). The agreements serve as safeguards for federal funds and provide third party rights to HUD. Among the terms in many agreements are requirements for funds to be placed in an interest-bearing account (24 CFR section 982.156). Condition: The Authority does not have a depository agreement in place with HUD. Housing Voucher Cluster funds are not deposited in a separate interest-bearing account. Questioned costs: Unable to determine. Context: A depository agreement has not been executed. Cause: The Authority’s Housing Voucher Cluster funds are not deposited in a separate interest-bearing account. Effect: The Authority is not in compliance with depository agreement requirements. Repeat Finding: Yes, see finding 2022-003. Recommendation: We recommend that the Authority sets up a separate interest-bearing account and executes a depository agreement with their financial institution and HUD; alternatively, we recommend that the Authority obtains a waiver from this requirement if local regulation prohibits the Authority from following 24 CFR section 982.156. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Eligibility Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: The PHA must obtain and document in the tenant file third-party verification of the following factors, or must document in the tenant file why third-party verification was not available:(i) Reported family annual income; (ii) The value of assets; (iii) Expenses related to deductions from annual income; and (iv) Other factors that affect the determination of adjusted income. (2 CFR section 982.516) Condition: The Authority did maintain support for the income used in a tenant’s recertification. Questioned costs: $6,228 Context: A sample of 40 tenants found that 1 tenant file did not contain proper support for the income amount used in their recertification. Cause: The Authority did not maintain the proper support for the eligibility determination. Effect: The Authority is not in compliance with eligibility requirements. Repeat Finding: No. Recommendation: We recommend the Authority implements controls to ensure that tenant files contain all required documentation. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Eligibility Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: The PHA must obtain and document in the tenant file third-party verification of the following factors, or must document in the tenant file why third-party verification was not available:(i) Reported family annual income; (ii) The value of assets; (iii) Expenses related to deductions from annual income; and (iv) Other factors that affect the determination of adjusted income. (2 CFR section 982.516) Condition: The Authority did maintain support for the income used in a tenant’s recertification. Questioned costs: $6,228 Context: A sample of 40 tenants found that 1 tenant file did not contain proper support for the income amount used in their recertification. Cause: The Authority did not maintain the proper support for the eligibility determination. Effect: The Authority is not in compliance with eligibility requirements. Repeat Finding: No. Recommendation: We recommend the Authority implements controls to ensure that tenant files contain all required documentation. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Eligibility Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: The PHA must obtain and document in the tenant file third-party verification of the following factors, or must document in the tenant file why third-party verification was not available:(i) Reported family annual income; (ii) The value of assets; (iii) Expenses related to deductions from annual income; and (iv) Other factors that affect the determination of adjusted income. (2 CFR section 982.516) Condition: The Authority did maintain support for the income used in a tenant’s recertification. Questioned costs: $6,228 Context: A sample of 40 tenants found that 1 tenant file did not contain proper support for the income amount used in their recertification. Cause: The Authority did not maintain the proper support for the eligibility determination. Effect: The Authority is not in compliance with eligibility requirements. Repeat Finding: No. Recommendation: We recommend the Authority implements controls to ensure that tenant files contain all required documentation. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Reporting Type of Finding:  Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: HUD-52648, SEMAP Certification – Under 24 CFR section 985.3(h), the Authority is required to submit an annual certification to HUD concerning its performance in key Section 8 program areas. The Uniform Guidance requires that the Authority establish and maintain effective internal control over compliance requirements. Condition: During our testing, we noted that the Authority did not have adequate internal controls designed to ensure that they followed applicable reporting requirements. Questioned costs: Unable to determine. Context: The annual report that was reviewed was prepared and submitted by the same person, which means that there was no review conducted by another person. This lack of review indicates that there was no internal control in place to ensure that the report was sufficiently reviewed and approved. Cause: The Authority does not have a sufficient internal control included in their procedures for preparing and submitting the SEMAP. Effect: The Authority is not in compliance with applicable reporting requirements. Repeat Finding: No. Recommendation: We recommend that the Authority implements controls in order to ensure reporting requirements are met in accordance with applicable grant agreements and regulations. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Reporting Type of Finding:  Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: HUD-52648, SEMAP Certification – Under 24 CFR section 985.3(h), the Authority is required to submit an annual certification to HUD concerning its performance in key Section 8 program areas. The Uniform Guidance requires that the Authority establish and maintain effective internal control over compliance requirements. Condition: During our testing, we noted that the Authority did not have adequate internal controls designed to ensure that they followed applicable reporting requirements. Questioned costs: Unable to determine. Context: The annual report that was reviewed was prepared and submitted by the same person, which means that there was no review conducted by another person. This lack of review indicates that there was no internal control in place to ensure that the report was sufficiently reviewed and approved. Cause: The Authority does not have a sufficient internal control included in their procedures for preparing and submitting the SEMAP. Effect: The Authority is not in compliance with applicable reporting requirements. Repeat Finding: No. Recommendation: We recommend that the Authority implements controls in order to ensure reporting requirements are met in accordance with applicable grant agreements and regulations. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Reporting Type of Finding:  Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: HUD-52648, SEMAP Certification – Under 24 CFR section 985.3(h), the Authority is required to submit an annual certification to HUD concerning its performance in key Section 8 program areas. The Uniform Guidance requires that the Authority establish and maintain effective internal control over compliance requirements. Condition: During our testing, we noted that the Authority did not have adequate internal controls designed to ensure that they followed applicable reporting requirements. Questioned costs: Unable to determine. Context: The annual report that was reviewed was prepared and submitted by the same person, which means that there was no review conducted by another person. This lack of review indicates that there was no internal control in place to ensure that the report was sufficiently reviewed and approved. Cause: The Authority does not have a sufficient internal control included in their procedures for preparing and submitting the SEMAP. Effect: The Authority is not in compliance with applicable reporting requirements. Repeat Finding: No. Recommendation: We recommend that the Authority implements controls in order to ensure reporting requirements are met in accordance with applicable grant agreements and regulations. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions - Rolling Forward Equity Balances Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: PHAs are required to maintain complete and accurate accounts. In addition, the ACC requires PHA to properly account for program activity. Proper accounting requires that (1) account balances are properly maintained, (2) records and accounting transactions support a proper roll-forward of equity, and (3) errors are corrected as detected.(24 CFR section 982.158). Condition: The Authority did not properly reconcile HAP and administrative equity in the prior fiscal year and processed a prior period adjustment to transfer the erroneous equity out of the program during the current fiscal year. Questioned costs: Known questioned costs of $517,497 calculated based on the program prior period adjustment. Context: The equity roll forward identified the program’s equity included an erroneous transfer in the prior year and required a prior period adjustment to correct. Cause: The Authority did not accurately reconcile program equity. Effect: The Authority is not in compliance with Housing Choice Voucher equity roll forward requirements. Repeat Finding: No. Recommendation: We recommend the authority review the equity roll forward of programs to identify and correct errors in the correct reporting period. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions - Rolling Forward Equity Balances Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: PHAs are required to maintain complete and accurate accounts. In addition, the ACC requires PHA to properly account for program activity. Proper accounting requires that (1) account balances are properly maintained, (2) records and accounting transactions support a proper roll-forward of equity, and (3) errors are corrected as detected.(24 CFR section 982.158). Condition: The Authority did not properly reconcile HAP and administrative equity in the prior fiscal year and processed a prior period adjustment to transfer the erroneous equity out of the program during the current fiscal year. Questioned costs: Known questioned costs of $517,497 calculated based on the program prior period adjustment. Context: The equity roll forward identified the program’s equity included an erroneous transfer in the prior year and required a prior period adjustment to correct. Cause: The Authority did not accurately reconcile program equity. Effect: The Authority is not in compliance with Housing Choice Voucher equity roll forward requirements. Repeat Finding: No. Recommendation: We recommend the authority review the equity roll forward of programs to identify and correct errors in the correct reporting period. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions - Rolling Forward Equity Balances Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: PHAs are required to maintain complete and accurate accounts. In addition, the ACC requires PHA to properly account for program activity. Proper accounting requires that (1) account balances are properly maintained, (2) records and accounting transactions support a proper roll-forward of equity, and (3) errors are corrected as detected.(24 CFR section 982.158). Condition: The Authority did not properly reconcile HAP and administrative equity in the prior fiscal year and processed a prior period adjustment to transfer the erroneous equity out of the program during the current fiscal year. Questioned costs: Known questioned costs of $517,497 calculated based on the program prior period adjustment. Context: The equity roll forward identified the program’s equity included an erroneous transfer in the prior year and required a prior period adjustment to correct. Cause: The Authority did not accurately reconcile program equity. Effect: The Authority is not in compliance with Housing Choice Voucher equity roll forward requirements. Repeat Finding: No. Recommendation: We recommend the authority review the equity roll forward of programs to identify and correct errors in the correct reporting period. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Housing Quality Standards (HQS) Inspections Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: The South Carolina State Housing Finance and Development Authority (the Authority) must inspect a unit leased to a family at least annually to determine if the unit meets HQS and the Authority must conduct quality control (QC) re-inspections (24 CFR sections 982.405(a) and 982.405(b)). Condition: The Authority did not perform HQS and QC inspections in accordance with program compliance requirements. Questioned costs: Unable to determine. Context: A sample of 40 units found that 3 units that were not inspected timely. The Authority did not perform QC inspections during the fiscal year. Cause: HQS inspections were not completed within the required timeframe for 3 units. The Authority did not perform QC inspections during the fiscal year. Effect: The Authority is not in compliance with HQS and QC inspection requirements. Repeat Finding: Yes, see finding 2022-001. Recommendation: We recommend the Authority implements controls to ensure that required HQS and QC inspections are completed timely. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Housing Quality Standards (HQS) Inspections Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: The South Carolina State Housing Finance and Development Authority (the Authority) must inspect a unit leased to a family at least annually to determine if the unit meets HQS and the Authority must conduct quality control (QC) re-inspections (24 CFR sections 982.405(a) and 982.405(b)). Condition: The Authority did not perform HQS and QC inspections in accordance with program compliance requirements. Questioned costs: Unable to determine. Context: A sample of 40 units found that 3 units that were not inspected timely. The Authority did not perform QC inspections during the fiscal year. Cause: HQS inspections were not completed within the required timeframe for 3 units. The Authority did not perform QC inspections during the fiscal year. Effect: The Authority is not in compliance with HQS and QC inspection requirements. Repeat Finding: Yes, see finding 2022-001. Recommendation: We recommend the Authority implements controls to ensure that required HQS and QC inspections are completed timely. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Housing Quality Standards (HQS) Inspections Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: The South Carolina State Housing Finance and Development Authority (the Authority) must inspect a unit leased to a family at least annually to determine if the unit meets HQS and the Authority must conduct quality control (QC) re-inspections (24 CFR sections 982.405(a) and 982.405(b)). Condition: The Authority did not perform HQS and QC inspections in accordance with program compliance requirements. Questioned costs: Unable to determine. Context: A sample of 40 units found that 3 units that were not inspected timely. The Authority did not perform QC inspections during the fiscal year. Cause: HQS inspections were not completed within the required timeframe for 3 units. The Authority did not perform QC inspections during the fiscal year. Effect: The Authority is not in compliance with HQS and QC inspection requirements. Repeat Finding: Yes, see finding 2022-001. Recommendation: We recommend the Authority implements controls to ensure that required HQS and QC inspections are completed timely. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – HQS Enforcement Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: For units under Housing Assistance Payment (HAP) contract that fail to meet HQS, the Authority must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified Authority-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the Authority must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as a result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the Authority must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). Condition: The Authority did not require HQS deficiencies to be corrected within the required timeframe. The Authority did not abate units that failed to correct HQS deficiencies within the required timeframe. Questioned costs: $7,698 Context: Exceptions were noted in 28 out of 40 failed inspections:  In 23 instances, the Authority did not reinspect the unit within the required timeframe.  In 8 instances, the Authority did not abate the unit for the required timeframe.  In 2 instances, the Authority did not take the proper steps to enforce family obligations.  In 13 instances, the Authority did not notify the tenant of the inspection results within the required timeframe.  In 2 instances, the Authority was unable to provide the inspection documentation. Cause: The Authority did not reinspect or abate units timely. Effect: The Authority is not in compliance with HQS enforcement requirements. Repeat Finding: Yes, see finding 2022-002. Recommendation: We recommend the Authority implements controls to ensure that the Authority requires HQS deficiencies to be corrected within the timeframe set forth by 2 CFR section 982.404(a). We recommend the Authority implements controls to ensure abatement is timely for units that do not correct the cited HQS deficiencies within the required timeframe. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – HQS Enforcement Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: For units under Housing Assistance Payment (HAP) contract that fail to meet HQS, the Authority must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified Authority-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the Authority must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as a result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the Authority must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). Condition: The Authority did not require HQS deficiencies to be corrected within the required timeframe. The Authority did not abate units that failed to correct HQS deficiencies within the required timeframe. Questioned costs: $7,698 Context: Exceptions were noted in 28 out of 40 failed inspections:  In 23 instances, the Authority did not reinspect the unit within the required timeframe.  In 8 instances, the Authority did not abate the unit for the required timeframe.  In 2 instances, the Authority did not take the proper steps to enforce family obligations.  In 13 instances, the Authority did not notify the tenant of the inspection results within the required timeframe.  In 2 instances, the Authority was unable to provide the inspection documentation. Cause: The Authority did not reinspect or abate units timely. Effect: The Authority is not in compliance with HQS enforcement requirements. Repeat Finding: Yes, see finding 2022-002. Recommendation: We recommend the Authority implements controls to ensure that the Authority requires HQS deficiencies to be corrected within the timeframe set forth by 2 CFR section 982.404(a). We recommend the Authority implements controls to ensure abatement is timely for units that do not correct the cited HQS deficiencies within the required timeframe. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – HQS Enforcement Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: For units under Housing Assistance Payment (HAP) contract that fail to meet HQS, the Authority must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified Authority-approved extension. If the owner does not correct the cited HQS deficiencies within the specified correction period, the Authority must stop (abate) HAPs beginning no later than the first of the month following the specified correction period or must terminate the HAP contract. The owner is not responsible for a breach of HQS as a result of the family’s failure to pay for utilities for which the family is responsible under the lease or for tenant damage. For family-caused defects, if the family does not correct the cited HQS deficiencies within the specified correction period, the Authority must take prompt and vigorous action to enforce the family obligations (24 CFR sections 982.158(d) and 982.404). Condition: The Authority did not require HQS deficiencies to be corrected within the required timeframe. The Authority did not abate units that failed to correct HQS deficiencies within the required timeframe. Questioned costs: $7,698 Context: Exceptions were noted in 28 out of 40 failed inspections:  In 23 instances, the Authority did not reinspect the unit within the required timeframe.  In 8 instances, the Authority did not abate the unit for the required timeframe.  In 2 instances, the Authority did not take the proper steps to enforce family obligations.  In 13 instances, the Authority did not notify the tenant of the inspection results within the required timeframe.  In 2 instances, the Authority was unable to provide the inspection documentation. Cause: The Authority did not reinspect or abate units timely. Effect: The Authority is not in compliance with HQS enforcement requirements. Repeat Finding: Yes, see finding 2022-002. Recommendation: We recommend the Authority implements controls to ensure that the Authority requires HQS deficiencies to be corrected within the timeframe set forth by 2 CFR section 982.404(a). We recommend the Authority implements controls to ensure abatement is timely for units that do not correct the cited HQS deficiencies within the required timeframe. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Reasonable Rent Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must determine that the rent to 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 five 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) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: The Authority did not perform rent reasonableness procedures in accordance with program compliance requirements. Questioned costs: Unable to determine. Context: During the testing of the Housing Choice Voucher Program tenant files, certain special provision compliance deficiencies were noted in 8 out of 25 new tenant files and 6 out of 40 contract rent change files as summarized below:  8 instances where the rent reasonableness for a new tenant was not performed prior to the effective date.  2 instances where the rent reasonableness determination form for a new tenant was unable to be provided for review.  5 instances where the rent reasonableness for a rent change was not performed prior to the effective date.  1 instance where a rent reasonableness review for a rent change was not performed. Cause: The Authority failed to determine the rent reasonable before the tenants’ effective date and/or failed to contain proper documentation of the information performed. Effect: The Authority is not in compliance with federal regulations regarding the determination of reasonable rent. HAP payments could be based on unreasonable rents. Repeat Finding: Yes, see finding 2022-004. Recommendation: We recommend that the Authority designate an individual to review tenant files to determine if a rent reasonableness has been performed. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Reasonable Rent Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must determine that the rent to 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 five 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) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: The Authority did not perform rent reasonableness procedures in accordance with program compliance requirements. Questioned costs: Unable to determine. Context: During the testing of the Housing Choice Voucher Program tenant files, certain special provision compliance deficiencies were noted in 8 out of 25 new tenant files and 6 out of 40 contract rent change files as summarized below:  8 instances where the rent reasonableness for a new tenant was not performed prior to the effective date.  2 instances where the rent reasonableness determination form for a new tenant was unable to be provided for review.  5 instances where the rent reasonableness for a rent change was not performed prior to the effective date.  1 instance where a rent reasonableness review for a rent change was not performed. Cause: The Authority failed to determine the rent reasonable before the tenants’ effective date and/or failed to contain proper documentation of the information performed. Effect: The Authority is not in compliance with federal regulations regarding the determination of reasonable rent. HAP payments could be based on unreasonable rents. Repeat Finding: Yes, see finding 2022-004. Recommendation: We recommend that the Authority designate an individual to review tenant files to determine if a rent reasonableness has been performed. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Reasonable Rent Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: The PHA must determine that the rent to 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 five 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) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507). Condition: The Authority did not perform rent reasonableness procedures in accordance with program compliance requirements. Questioned costs: Unable to determine. Context: During the testing of the Housing Choice Voucher Program tenant files, certain special provision compliance deficiencies were noted in 8 out of 25 new tenant files and 6 out of 40 contract rent change files as summarized below:  8 instances where the rent reasonableness for a new tenant was not performed prior to the effective date.  2 instances where the rent reasonableness determination form for a new tenant was unable to be provided for review.  5 instances where the rent reasonableness for a rent change was not performed prior to the effective date.  1 instance where a rent reasonableness review for a rent change was not performed. Cause: The Authority failed to determine the rent reasonable before the tenants’ effective date and/or failed to contain proper documentation of the information performed. Effect: The Authority is not in compliance with federal regulations regarding the determination of reasonable rent. HAP payments could be based on unreasonable rents. Repeat Finding: Yes, see finding 2022-004. Recommendation: We recommend that the Authority designate an individual to review tenant files to determine if a rent reasonableness has been performed. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Emergency Rental Assistance (ERA) Assistance Listing Number: 21.023 Federal Award Identification Number and Year: ERAE0406 and ERAE0407 - 2022 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Reporting Type of Finding:  Material Weakness in Internal Control over Compliance  Material Noncompliance (Modified Opinion) Criteria or specific requirement: Monthly and quarterly reports are required to be submitted in accordance with Treasury guidance beginning in the first quarter of 2021 through September of 2022 for ERA1 and through September of 2025 for ERA 2. The monthly and quarterly reports are required to be submitted by the 15th of the following month. Condition: The Authority did not maintain documentation to support reported amounts and documentation of the internal control over compliance was not maintained. Questioned costs: Unable to determine. Context: A sample of 4 reports were unsupported and did not include documentation of review and approval. Cause: Documentation was not maintained that supported the amounts reported. Effect: The Authority is not in compliance with ERA reporting requirements. Repeat Finding: Yes, see finding 2022-005. Recommendation: We recommend the Authority implements controls to ensure that documentation is maintained to support amounts reported. Review and approval of the amounts reported to Treasury should be documented. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Emergency Rental Assistance (ERA) Assistance Listing Number: 21.023 Federal Award Identification Number and Year: ERAE0406 and ERAE0407 - 2022 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Period of Performance Type of Finding:  Material Weakness in Internal Control over Compliance Criteria or specific requirement: The period of performance for the Emergency Rental Assistance program is defined in 2 CFR 200.344(d) and requires that all grant funds be expended within the approved period of performance. Condition: The Authority did not maintain support to document that expenses charged to the grant at the period of performance end were properly approved to be charged to the program. Questioned costs: None. Context: A sample of 40 expenses charged to the grant after the period of performance identified that 29 of 40 expenses lacked evidence that an internal control over compliance was present. Cause: The Authority did not maintain support to properly evidence an internal control over compliance. Effect: The Authority is not meeting the Uniform Guidance requirements for internal controls over compliance with ERA reporting requirements. Repeat Finding: No. Recommendation: We recommend the Authority implements an internal control over compliance to evidence the expenses are approved to be charged to the grant. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Depository Agreement Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: Authorities are required to enter into depository agreements with their financial institutions in the form required by the U.S. Department of Housing and Urban Development (HUD). The agreements serve as safeguards for federal funds and provide third party rights to HUD. Among the terms in many agreements are requirements for funds to be placed in an interest-bearing account (24 CFR section 982.156). Condition: The Authority does not have a depository agreement in place with HUD. Housing Voucher Cluster funds are not deposited in a separate interest-bearing account. Questioned costs: Unable to determine. Context: A depository agreement has not been executed. Cause: The Authority’s Housing Voucher Cluster funds are not deposited in a separate interest-bearing account. Effect: The Authority is not in compliance with depository agreement requirements. Repeat Finding: Yes, see finding 2022-003. Recommendation: We recommend that the Authority sets up a separate interest-bearing account and executes a depository agreement with their financial institution and HUD; alternatively, we recommend that the Authority obtains a waiver from this requirement if local regulation prohibits the Authority from following 24 CFR section 982.156. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Depository Agreement Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: Authorities are required to enter into depository agreements with their financial institutions in the form required by the U.S. Department of Housing and Urban Development (HUD). The agreements serve as safeguards for federal funds and provide third party rights to HUD. Among the terms in many agreements are requirements for funds to be placed in an interest-bearing account (24 CFR section 982.156). Condition: The Authority does not have a depository agreement in place with HUD. Housing Voucher Cluster funds are not deposited in a separate interest-bearing account. Questioned costs: Unable to determine. Context: A depository agreement has not been executed. Cause: The Authority’s Housing Voucher Cluster funds are not deposited in a separate interest-bearing account. Effect: The Authority is not in compliance with depository agreement requirements. Repeat Finding: Yes, see finding 2022-003. Recommendation: We recommend that the Authority sets up a separate interest-bearing account and executes a depository agreement with their financial institution and HUD; alternatively, we recommend that the Authority obtains a waiver from this requirement if local regulation prohibits the Authority from following 24 CFR section 982.156. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions – Depository Agreement Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: Authorities are required to enter into depository agreements with their financial institutions in the form required by the U.S. Department of Housing and Urban Development (HUD). The agreements serve as safeguards for federal funds and provide third party rights to HUD. Among the terms in many agreements are requirements for funds to be placed in an interest-bearing account (24 CFR section 982.156). Condition: The Authority does not have a depository agreement in place with HUD. Housing Voucher Cluster funds are not deposited in a separate interest-bearing account. Questioned costs: Unable to determine. Context: A depository agreement has not been executed. Cause: The Authority’s Housing Voucher Cluster funds are not deposited in a separate interest-bearing account. Effect: The Authority is not in compliance with depository agreement requirements. Repeat Finding: Yes, see finding 2022-003. Recommendation: We recommend that the Authority sets up a separate interest-bearing account and executes a depository agreement with their financial institution and HUD; alternatively, we recommend that the Authority obtains a waiver from this requirement if local regulation prohibits the Authority from following 24 CFR section 982.156. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Eligibility Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: The PHA must obtain and document in the tenant file third-party verification of the following factors, or must document in the tenant file why third-party verification was not available:(i) Reported family annual income; (ii) The value of assets; (iii) Expenses related to deductions from annual income; and (iv) Other factors that affect the determination of adjusted income. (2 CFR section 982.516) Condition: The Authority did maintain support for the income used in a tenant’s recertification. Questioned costs: $6,228 Context: A sample of 40 tenants found that 1 tenant file did not contain proper support for the income amount used in their recertification. Cause: The Authority did not maintain the proper support for the eligibility determination. Effect: The Authority is not in compliance with eligibility requirements. Repeat Finding: No. Recommendation: We recommend the Authority implements controls to ensure that tenant files contain all required documentation. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Eligibility Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: The PHA must obtain and document in the tenant file third-party verification of the following factors, or must document in the tenant file why third-party verification was not available:(i) Reported family annual income; (ii) The value of assets; (iii) Expenses related to deductions from annual income; and (iv) Other factors that affect the determination of adjusted income. (2 CFR section 982.516) Condition: The Authority did maintain support for the income used in a tenant’s recertification. Questioned costs: $6,228 Context: A sample of 40 tenants found that 1 tenant file did not contain proper support for the income amount used in their recertification. Cause: The Authority did not maintain the proper support for the eligibility determination. Effect: The Authority is not in compliance with eligibility requirements. Repeat Finding: No. Recommendation: We recommend the Authority implements controls to ensure that tenant files contain all required documentation. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Eligibility Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: The PHA must obtain and document in the tenant file third-party verification of the following factors, or must document in the tenant file why third-party verification was not available:(i) Reported family annual income; (ii) The value of assets; (iii) Expenses related to deductions from annual income; and (iv) Other factors that affect the determination of adjusted income. (2 CFR section 982.516) Condition: The Authority did maintain support for the income used in a tenant’s recertification. Questioned costs: $6,228 Context: A sample of 40 tenants found that 1 tenant file did not contain proper support for the income amount used in their recertification. Cause: The Authority did not maintain the proper support for the eligibility determination. Effect: The Authority is not in compliance with eligibility requirements. Repeat Finding: No. Recommendation: We recommend the Authority implements controls to ensure that tenant files contain all required documentation. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Reporting Type of Finding:  Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: HUD-52648, SEMAP Certification – Under 24 CFR section 985.3(h), the Authority is required to submit an annual certification to HUD concerning its performance in key Section 8 program areas. The Uniform Guidance requires that the Authority establish and maintain effective internal control over compliance requirements. Condition: During our testing, we noted that the Authority did not have adequate internal controls designed to ensure that they followed applicable reporting requirements. Questioned costs: Unable to determine. Context: The annual report that was reviewed was prepared and submitted by the same person, which means that there was no review conducted by another person. This lack of review indicates that there was no internal control in place to ensure that the report was sufficiently reviewed and approved. Cause: The Authority does not have a sufficient internal control included in their procedures for preparing and submitting the SEMAP. Effect: The Authority is not in compliance with applicable reporting requirements. Repeat Finding: No. Recommendation: We recommend that the Authority implements controls in order to ensure reporting requirements are met in accordance with applicable grant agreements and regulations. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Reporting Type of Finding:  Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: HUD-52648, SEMAP Certification – Under 24 CFR section 985.3(h), the Authority is required to submit an annual certification to HUD concerning its performance in key Section 8 program areas. The Uniform Guidance requires that the Authority establish and maintain effective internal control over compliance requirements. Condition: During our testing, we noted that the Authority did not have adequate internal controls designed to ensure that they followed applicable reporting requirements. Questioned costs: Unable to determine. Context: The annual report that was reviewed was prepared and submitted by the same person, which means that there was no review conducted by another person. This lack of review indicates that there was no internal control in place to ensure that the report was sufficiently reviewed and approved. Cause: The Authority does not have a sufficient internal control included in their procedures for preparing and submitting the SEMAP. Effect: The Authority is not in compliance with applicable reporting requirements. Repeat Finding: No. Recommendation: We recommend that the Authority implements controls in order to ensure reporting requirements are met in accordance with applicable grant agreements and regulations. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Reporting Type of Finding:  Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: HUD-52648, SEMAP Certification – Under 24 CFR section 985.3(h), the Authority is required to submit an annual certification to HUD concerning its performance in key Section 8 program areas. The Uniform Guidance requires that the Authority establish and maintain effective internal control over compliance requirements. Condition: During our testing, we noted that the Authority did not have adequate internal controls designed to ensure that they followed applicable reporting requirements. Questioned costs: Unable to determine. Context: The annual report that was reviewed was prepared and submitted by the same person, which means that there was no review conducted by another person. This lack of review indicates that there was no internal control in place to ensure that the report was sufficiently reviewed and approved. Cause: The Authority does not have a sufficient internal control included in their procedures for preparing and submitting the SEMAP. Effect: The Authority is not in compliance with applicable reporting requirements. Repeat Finding: No. Recommendation: We recommend that the Authority implements controls in order to ensure reporting requirements are met in accordance with applicable grant agreements and regulations. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions - Rolling Forward Equity Balances Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: PHAs are required to maintain complete and accurate accounts. In addition, the ACC requires PHA to properly account for program activity. Proper accounting requires that (1) account balances are properly maintained, (2) records and accounting transactions support a proper roll-forward of equity, and (3) errors are corrected as detected.(24 CFR section 982.158). Condition: The Authority did not properly reconcile HAP and administrative equity in the prior fiscal year and processed a prior period adjustment to transfer the erroneous equity out of the program during the current fiscal year. Questioned costs: Known questioned costs of $517,497 calculated based on the program prior period adjustment. Context: The equity roll forward identified the program’s equity included an erroneous transfer in the prior year and required a prior period adjustment to correct. Cause: The Authority did not accurately reconcile program equity. Effect: The Authority is not in compliance with Housing Choice Voucher equity roll forward requirements. Repeat Finding: No. Recommendation: We recommend the authority review the equity roll forward of programs to identify and correct errors in the correct reporting period. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions - Rolling Forward Equity Balances Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: PHAs are required to maintain complete and accurate accounts. In addition, the ACC requires PHA to properly account for program activity. Proper accounting requires that (1) account balances are properly maintained, (2) records and accounting transactions support a proper roll-forward of equity, and (3) errors are corrected as detected.(24 CFR section 982.158). Condition: The Authority did not properly reconcile HAP and administrative equity in the prior fiscal year and processed a prior period adjustment to transfer the erroneous equity out of the program during the current fiscal year. Questioned costs: Known questioned costs of $517,497 calculated based on the program prior period adjustment. Context: The equity roll forward identified the program’s equity included an erroneous transfer in the prior year and required a prior period adjustment to correct. Cause: The Authority did not accurately reconcile program equity. Effect: The Authority is not in compliance with Housing Choice Voucher equity roll forward requirements. Repeat Finding: No. Recommendation: We recommend the authority review the equity roll forward of programs to identify and correct errors in the correct reporting period. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster Assistance Listing Numbers: 14.871/14.879 Federal Award Identification Number and Year: SC911VO - 2023 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Special Tests and Provisions - Rolling Forward Equity Balances Type of Finding:  Significant Deficiency in Internal Control over Compliance  Other Matters Criteria or specific requirement: PHAs are required to maintain complete and accurate accounts. In addition, the ACC requires PHA to properly account for program activity. Proper accounting requires that (1) account balances are properly maintained, (2) records and accounting transactions support a proper roll-forward of equity, and (3) errors are corrected as detected.(24 CFR section 982.158). Condition: The Authority did not properly reconcile HAP and administrative equity in the prior fiscal year and processed a prior period adjustment to transfer the erroneous equity out of the program during the current fiscal year. Questioned costs: Known questioned costs of $517,497 calculated based on the program prior period adjustment. Context: The equity roll forward identified the program’s equity included an erroneous transfer in the prior year and required a prior period adjustment to correct. Cause: The Authority did not accurately reconcile program equity. Effect: The Authority is not in compliance with Housing Choice Voucher equity roll forward requirements. Repeat Finding: No. Recommendation: We recommend the authority review the equity roll forward of programs to identify and correct errors in the correct reporting period. Views of responsible officials: There is no disagreement with the audit finding.