Audit 309004

2023-005. Tenant Accounts Receivable Criteria: Under the terms of the annual contributions contract, each project shall be developed and administered to promote efficiency, economy and stability. Condition: I noted tenant accounts receivable at year end were $36,933 (excluding vacated and tenants who have signed a repayment agreement) which represents 54% of the total charges for the month of September 2023. Questioned Costs: None noted. Effect: The continuing growth in tenant accounts receivable is a threat to maintaining a financially solvent operation. Without proper rent collection, current operating expenses cannot be paid. Cause: The Authority did not effectively enforce its rent collection policy resulting in a significant amount being owed to the Authority. Recommendation: I recommend that the Authority place greater emphasis on the collection of all outstanding balances. Management’s Response: We are trying to find a new hire to assist our Public Housing - Operations Manager with collections. Our clientele base has gotten tougher to keep ahead of over the past several years. With all of the other concerns we deal with (tenant problems, tenant apathy, tenants not abiding by our rules, etc.) the job has become too large for one person. We attempt to work with our residents rather than simply evicting them for non-payment of rent, however, it seems that so many these days do not hold up their end of the bargain in the end. An extra person to deal with those in arrears will help tremendously.

2023-006. Significant Audit Adjustments Criteria: The Authority should take the steps necessary to ensure accuracy and completeness of the financial statements. Condition: This audit required a number of significant adjusting journal entries. These entries were necessary because certain unadjusted general ledger accounts were incorrect and/or not recorded correctly. Questioned Costs: None noted. Effect: The PHA’s financial statements before any adjusting entries contained errors and/or were not properly recorded. Cause: This appears to be an oversight by the Authority. Recommendation: I recommend that the Authority exercise more care in processing and recording transactions and that more care be taken to ensure the completeness of financial reporting. Management’s Response: The Dodge City Housing Authority has a fee accountant for a reason. We have no one on staff who is an accountant. The Executive Director has a rudimentary idea of accounting principles, however, he must trust our fee accountant to some extent due to his lack of full understanding of our accounting. We have adjustments every year due to something being coded improperly or simply being charged to the wrong account. This past year, our fee accountant made all of our end of the year postings without receiving my end of the year packet. They told me after they closed my year that they never did receive the end of the year information I sent to them via U.S. mail. This caused several end-of-the-year adjustments that we have not seen in years past. I wish I could say I will stay on top of them; however, I wouldn't know where to begin as a non-accountant. I will tell them to keep me better informed of information they need (or have not received from me) in the future. We will look for a new fee accountant otherwise.

2023-007 SEMAP Supporting Documentation Criteria: SEMAP indicators should be supported by sufficient documentation. Condition: I noted that certain indicators appearing on the September 30, 2023, SEMAP certification could not be verified as they were either not supported by adequate documentation or no quality control work were performed to substantiate PHA’s response. Questioned Costs: None noted. Effect: Responses on SEMAP certification may not be an accurate representation of PHA’s FY 2023 submission. Cause: Proper internal control procedures relating to SEMAP were not performed or maintained for SEMAP certification. Recommendation: I recommend that the Authority implement and perfect the procedures necessary to provide accurate and complete supporting documentation for future SEMAP certification. Management’s Response: I was pretty disappointed with our failing SEMAP score in FY 2023, I worked hard to make certain that all of my leased-up families were current in PIC. We had a couple of families that I was reporting as leased-up but they were not showing up in PIC. With a program as small as ours, two missing 50058s for Annual Re-Certification made us fall below the 95% threshold for reporting. This caused us to fail in several indicators, causing an overall failing SEMAP score. I corrected those concerns in 2023, however, we did not make time to train my new Maintenance Director on HQS and Rent Reasonableness. I was mistakenly under the impression that conducting HQS inspections annually and the QC of the inspections were graded separately. That was my mistake! We only have to do the program minimum of 5 units of Quality Control in the areas of choosing voucher holders off of the waiting list properly, conducting pre-contract HQS inspections, properly conducting Rent Reasonableness reviews, conducting annual HQS inspections and proper calculation of rent. We have everyone properly trained at this point and will not make that mistake again.

2023-008 Rent Deposits Criteria: The Authority should take the steps necessary to ensure accuracy and completeness of all deposits. Condition: The Authority is currently under an investigation by the Office of Inspector General (OIG). It appears that an employee was involved in fraudulent activities whilst collecting rent. The employee, when collecting rent in cash form would at times go back and void some of the receipts and pocket the rent. Per PHA, this went on for quite a few months during FY 2023. Questioned Costs: It is estimated that the questioned costs relating to these deposits can range from $43,654 to $83,009. Effect: The Authority’s deposits were mishandled by an employee. Cause: The origin of the problem appears to be the employee’s disregard for regulations and the Authority’s lack of awareness concerning the daily collection of rent. Recommendation: I recommend that the administration continue its efforts to determine the appropriate course of action. Management’s Response: We have put in place several new practices to ensure the problem does not occur again. All office staff have been set up with passwords to access our rent collection programs. We can now tell who makes what transaction as they occur. We did not have that capability prior to the missing money. The Executive Director now looks at the Void log and the Rent Credit log at the end of each month to make sure all transactions are accounted for and valid. Unless the perpetrator comes up with a new and ingenious way to steal money from the DCHA, we feel confident we are covered. There is no possible way they will be able to steal money again in the manner they did in this case.

2023-005. Tenant Accounts Receivable Criteria: Under the terms of the annual contributions contract, each project shall be developed and administered to promote efficiency, economy and stability. Condition: I noted tenant accounts receivable at year end were $36,933 (excluding vacated and tenants who have signed a repayment agreement) which represents 54% of the total charges for the month of September 2023. Questioned Costs: None noted. Effect: The continuing growth in tenant accounts receivable is a threat to maintaining a financially solvent operation. Without proper rent collection, current operating expenses cannot be paid. Cause: The Authority did not effectively enforce its rent collection policy resulting in a significant amount being owed to the Authority. Recommendation: I recommend that the Authority place greater emphasis on the collection of all outstanding balances. Management’s Response: We are trying to find a new hire to assist our Public Housing - Operations Manager with collections. Our clientele base has gotten tougher to keep ahead of over the past several years. With all of the other concerns we deal with (tenant problems, tenant apathy, tenants not abiding by our rules, etc.) the job has become too large for one person. We attempt to work with our residents rather than simply evicting them for non-payment of rent, however, it seems that so many these days do not hold up their end of the bargain in the end. An extra person to deal with those in arrears will help tremendously.

2023-006. Significant Audit Adjustments Criteria: The Authority should take the steps necessary to ensure accuracy and completeness of the financial statements. Condition: This audit required a number of significant adjusting journal entries. These entries were necessary because certain unadjusted general ledger accounts were incorrect and/or not recorded correctly. Questioned Costs: None noted. Effect: The PHA’s financial statements before any adjusting entries contained errors and/or were not properly recorded. Cause: This appears to be an oversight by the Authority. Recommendation: I recommend that the Authority exercise more care in processing and recording transactions and that more care be taken to ensure the completeness of financial reporting. Management’s Response: The Dodge City Housing Authority has a fee accountant for a reason. We have no one on staff who is an accountant. The Executive Director has a rudimentary idea of accounting principles, however, he must trust our fee accountant to some extent due to his lack of full understanding of our accounting. We have adjustments every year due to something being coded improperly or simply being charged to the wrong account. This past year, our fee accountant made all of our end of the year postings without receiving my end of the year packet. They told me after they closed my year that they never did receive the end of the year information I sent to them via U.S. mail. This caused several end-of-the-year adjustments that we have not seen in years past. I wish I could say I will stay on top of them; however, I wouldn't know where to begin as a non-accountant. I will tell them to keep me better informed of information they need (or have not received from me) in the future. We will look for a new fee accountant otherwise.

2023-007 SEMAP Supporting Documentation Criteria: SEMAP indicators should be supported by sufficient documentation. Condition: I noted that certain indicators appearing on the September 30, 2023, SEMAP certification could not be verified as they were either not supported by adequate documentation or no quality control work were performed to substantiate PHA’s response. Questioned Costs: None noted. Effect: Responses on SEMAP certification may not be an accurate representation of PHA’s FY 2023 submission. Cause: Proper internal control procedures relating to SEMAP were not performed or maintained for SEMAP certification. Recommendation: I recommend that the Authority implement and perfect the procedures necessary to provide accurate and complete supporting documentation for future SEMAP certification. Management’s Response: I was pretty disappointed with our failing SEMAP score in FY 2023, I worked hard to make certain that all of my leased-up families were current in PIC. We had a couple of families that I was reporting as leased-up but they were not showing up in PIC. With a program as small as ours, two missing 50058s for Annual Re-Certification made us fall below the 95% threshold for reporting. This caused us to fail in several indicators, causing an overall failing SEMAP score. I corrected those concerns in 2023, however, we did not make time to train my new Maintenance Director on HQS and Rent Reasonableness. I was mistakenly under the impression that conducting HQS inspections annually and the QC of the inspections were graded separately. That was my mistake! We only have to do the program minimum of 5 units of Quality Control in the areas of choosing voucher holders off of the waiting list properly, conducting pre-contract HQS inspections, properly conducting Rent Reasonableness reviews, conducting annual HQS inspections and proper calculation of rent. We have everyone properly trained at this point and will not make that mistake again.

2023-008 Rent Deposits Criteria: The Authority should take the steps necessary to ensure accuracy and completeness of all deposits. Condition: The Authority is currently under an investigation by the Office of Inspector General (OIG). It appears that an employee was involved in fraudulent activities whilst collecting rent. The employee, when collecting rent in cash form would at times go back and void some of the receipts and pocket the rent. Per PHA, this went on for quite a few months during FY 2023. Questioned Costs: It is estimated that the questioned costs relating to these deposits can range from $43,654 to $83,009. Effect: The Authority’s deposits were mishandled by an employee. Cause: The origin of the problem appears to be the employee’s disregard for regulations and the Authority’s lack of awareness concerning the daily collection of rent. Recommendation: I recommend that the administration continue its efforts to determine the appropriate course of action. Management’s Response: We have put in place several new practices to ensure the problem does not occur again. All office staff have been set up with passwords to access our rent collection programs. We can now tell who makes what transaction as they occur. We did not have that capability prior to the missing money. The Executive Director now looks at the Void log and the Rent Credit log at the end of each month to make sure all transactions are accounted for and valid. Unless the perpetrator comes up with a new and ingenious way to steal money from the DCHA, we feel confident we are covered. There is no possible way they will be able to steal money again in the manner they did in this case.