Audit 310841

2023-002 Internal Controls over Documentation in Tenant Files (Eligibility) Criteria: HUD regulations require that the Authority perform certain prescribed verification procedures and obtain the required documentation to assure that tenants qualify for low-income housing and that the amount of rent charged to tenants is calculated according to HUD rules and regulations. Condition: The authority had the following noncompliance instances out of the 40 tenant files selected out of 163 total units for testing: • 2 files did not have the appropriate annual recertification performed • 2 files did not contain a signed lease by the tenant • 13 files did have income verifications performed • 3 files did not contain appropriate verification of social security numbers and birth certificates of household members • 4 files did not contain a current Form 9886 • 7 files did not contain a current 50058 form • 12 files did not have signed citizenship forms • 15 files did not have annual rent determination forms • 8 files did not have the appropriate lead-based paint acknowledgement forms • 1 tenant was admitted to the program but was over-income • 34 files did not have an annual inspection performed during the year Questioned Costs: $14,080 Effect: The Authority is not in compliance with applicable HUD regulations regarding tenant eligibility and rent calculations. Cause: The Authority does not have proper procedures in place related to tenant certification and does not have a review procedure in place to detect errors timely. Recommendation: The Authority should establish proper procedures to ensure that the Authority is in compliance with HUD rules for verification of tenant information and calculation of tenant rent. In addition, the Authority should implement review procedures in order to detect errors timely. Management Response: The Authority was NOT provided the listing of the 40 tenant files reviewed with the issues related to each file. This was requested of the auditor when the draft audit report was provided to the Authority and has not been received. The Authority did receive a listing of 13 files but this listing did not contain specifics for each of the tenants listed as to how they fit into this finding.

2023-003 Ineligible fees for lawn care and pest control charged and paid by residents of Authority units (Activities Allowed or Unallowed) Criteria: Under HUD rules and regulations, the Authority is required to provide decent and safe rental housing for eligible low-income families, the elderly, and persons with disabilities. As such, the Authority is required to maintain the property as part of its operations. The cost of maintaining services for lawn care and pest control is a requirement of the Authority and should be paid for by the Authority’s program. Condition: It was determined that the Authority was charging $3 per unit per month for pest control and $5 per unit per month for pest control to each tenant. The amount due back to tenants for the years 2019-2023 totaled $41,659. Questioned Costs: $41,659 Effect: The Authority was recognizing revenues charged to tenants inappropriately and using these funds for operating expenses. Cause: The Authority did not realize that it could not charge its residents for both lawn care services and pest control. Recommendation: The Authority should reimburse all fees charged to tenants that were charged inappropriately. Management Response: A response cannot be directed to this finding until the amounts are reconciled to determine the amounts owed as not all of the residents were charged for lawn care (elderly residents were not charged). It should also be noted that this was first brought to light during a HUD Review that was not completed until early December 2023.

2023-004 Original Operating Budget Not approved until after the beginning of the fiscal year and Operating Budget Revision Not approved by Board of Commissioners for Operating Expenses that exceeded the Originally Approved Budget (Special Tests and Provisions) Criteria: In accordance with the Authority’s Annual Contributions Contract (ACC), the Authority is required to prepare and approve a Public Housing Operating Budget before the beginning of its fiscal year and approve an Operating Budget Revision for any operating expenses not previously budgeted for. Condition: The Board of Commissioners did not approve the fiscal year 2023 operating budget until October 18, 2022. The Authority’s actual expenditures exceeded its budgeted expenditures by $37,013. Questioned Costs: None. Effect: The Authority was not in compliance with the requirements of its ACC and the Authority had $37,013 in unbudgeted operating expenditures. Cause: The Authority did not have procedures in place to review actual expenditures for the year as compared to the amount of budgeted expenditures nor ensure operating budgets are approved before the beginning of its fiscal year. Recommendation: The Authority should establish a process whereby the operating expenditures are reviewed by the Authority’s Board of Commissioners to determine if a budget revision is necessary for approval before the end of its fiscal year and to ensure that operating budgets are approved before the beginning of the Authority’s fiscal year. Management Response: The Board could not meet due to personal circumstances of some of the Board members until October 2022 to approve the budget. The Board was made aware of the costs that exceeded the budgeted amounts but a format budget revision was not prepared. This issue was dealt with at the Board meeting in January 2024 where a budget policy was adopted.

2023-005 Authority did not perform annual housing unit inspections (Special Tests and Provisions) Criteria: HUD requires Public Housing Authorities to perform routine self-inspections of public housing properties. These self-inspections include an annual visual assessment of the property to look for all deficiencies and to determine the maintenance and modernization needs of the properties. In accordance with 24 CFR 5.703, the Authority must complete the annual inspections to ensure that all residents live in safe, habitable dwellings, the items and components located inside the building, outside the building, and within the units of HUD housing must be functionally adequate, operable, and free of health and safety hazards. Condition: The Authority did not perform the required annual inspection during its fiscal year. Questioned Costs: None. Effect: The Authority could have health and safety hazards present in its housing units that are not being adequately addressed. Cause: The Authority did not have procedures in place to track and monitor the annual inspection process. Recommendation: The Authority should establish a process whereby the inspection dates of units are monitored to ensure all units are inspected annually. The Authority should also establish procedures to ensure all health and safety hazards are addressed appropriately. Management Response: The Authority did not perform the annual inspection of units until after September 30, 2023. This issue has been corrected for the fiscal year ending September 30, 2024.

2023-002 Internal Controls over Documentation in Tenant Files (Eligibility) Criteria: HUD regulations require that the Authority perform certain prescribed verification procedures and obtain the required documentation to assure that tenants qualify for low-income housing and that the amount of rent charged to tenants is calculated according to HUD rules and regulations. Condition: The authority had the following noncompliance instances out of the 40 tenant files selected out of 163 total units for testing: • 2 files did not have the appropriate annual recertification performed • 2 files did not contain a signed lease by the tenant • 13 files did have income verifications performed • 3 files did not contain appropriate verification of social security numbers and birth certificates of household members • 4 files did not contain a current Form 9886 • 7 files did not contain a current 50058 form • 12 files did not have signed citizenship forms • 15 files did not have annual rent determination forms • 8 files did not have the appropriate lead-based paint acknowledgement forms • 1 tenant was admitted to the program but was over-income • 34 files did not have an annual inspection performed during the year Questioned Costs: $14,080 Effect: The Authority is not in compliance with applicable HUD regulations regarding tenant eligibility and rent calculations. Cause: The Authority does not have proper procedures in place related to tenant certification and does not have a review procedure in place to detect errors timely. Recommendation: The Authority should establish proper procedures to ensure that the Authority is in compliance with HUD rules for verification of tenant information and calculation of tenant rent. In addition, the Authority should implement review procedures in order to detect errors timely. Management Response: The Authority was NOT provided the listing of the 40 tenant files reviewed with the issues related to each file. This was requested of the auditor when the draft audit report was provided to the Authority and has not been received. The Authority did receive a listing of 13 files but this listing did not contain specifics for each of the tenants listed as to how they fit into this finding.

2023-003 Ineligible fees for lawn care and pest control charged and paid by residents of Authority units (Activities Allowed or Unallowed) Criteria: Under HUD rules and regulations, the Authority is required to provide decent and safe rental housing for eligible low-income families, the elderly, and persons with disabilities. As such, the Authority is required to maintain the property as part of its operations. The cost of maintaining services for lawn care and pest control is a requirement of the Authority and should be paid for by the Authority’s program. Condition: It was determined that the Authority was charging $3 per unit per month for pest control and $5 per unit per month for pest control to each tenant. The amount due back to tenants for the years 2019-2023 totaled $41,659. Questioned Costs: $41,659 Effect: The Authority was recognizing revenues charged to tenants inappropriately and using these funds for operating expenses. Cause: The Authority did not realize that it could not charge its residents for both lawn care services and pest control. Recommendation: The Authority should reimburse all fees charged to tenants that were charged inappropriately. Management Response: A response cannot be directed to this finding until the amounts are reconciled to determine the amounts owed as not all of the residents were charged for lawn care (elderly residents were not charged). It should also be noted that this was first brought to light during a HUD Review that was not completed until early December 2023.

2023-004 Original Operating Budget Not approved until after the beginning of the fiscal year and Operating Budget Revision Not approved by Board of Commissioners for Operating Expenses that exceeded the Originally Approved Budget (Special Tests and Provisions) Criteria: In accordance with the Authority’s Annual Contributions Contract (ACC), the Authority is required to prepare and approve a Public Housing Operating Budget before the beginning of its fiscal year and approve an Operating Budget Revision for any operating expenses not previously budgeted for. Condition: The Board of Commissioners did not approve the fiscal year 2023 operating budget until October 18, 2022. The Authority’s actual expenditures exceeded its budgeted expenditures by $37,013. Questioned Costs: None. Effect: The Authority was not in compliance with the requirements of its ACC and the Authority had $37,013 in unbudgeted operating expenditures. Cause: The Authority did not have procedures in place to review actual expenditures for the year as compared to the amount of budgeted expenditures nor ensure operating budgets are approved before the beginning of its fiscal year. Recommendation: The Authority should establish a process whereby the operating expenditures are reviewed by the Authority’s Board of Commissioners to determine if a budget revision is necessary for approval before the end of its fiscal year and to ensure that operating budgets are approved before the beginning of the Authority’s fiscal year. Management Response: The Board could not meet due to personal circumstances of some of the Board members until October 2022 to approve the budget. The Board was made aware of the costs that exceeded the budgeted amounts but a format budget revision was not prepared. This issue was dealt with at the Board meeting in January 2024 where a budget policy was adopted.

2023-005 Authority did not perform annual housing unit inspections (Special Tests and Provisions) Criteria: HUD requires Public Housing Authorities to perform routine self-inspections of public housing properties. These self-inspections include an annual visual assessment of the property to look for all deficiencies and to determine the maintenance and modernization needs of the properties. In accordance with 24 CFR 5.703, the Authority must complete the annual inspections to ensure that all residents live in safe, habitable dwellings, the items and components located inside the building, outside the building, and within the units of HUD housing must be functionally adequate, operable, and free of health and safety hazards. Condition: The Authority did not perform the required annual inspection during its fiscal year. Questioned Costs: None. Effect: The Authority could have health and safety hazards present in its housing units that are not being adequately addressed. Cause: The Authority did not have procedures in place to track and monitor the annual inspection process. Recommendation: The Authority should establish a process whereby the inspection dates of units are monitored to ensure all units are inspected annually. The Authority should also establish procedures to ensure all health and safety hazards are addressed appropriately. Management Response: The Authority did not perform the annual inspection of units until after September 30, 2023. This issue has been corrected for the fiscal year ending September 30, 2024.