Audit 315674

Finding 2023-001, Collateralization of Deposits Public Housing Program, Assistance Listing #14.850 Material Weakness/Noncompliance Criteria – As required by HUD Cash Management Policies PIH Notice 96-33, the Authority is required to have the financial institution continuously and fully secure all deposits whether regular, savings, or time that are in excess of the $250,000 FDIC insured amount. In addition, as required by Minn. Stat. Section 118A.03, the Authority must obtain a bond or collateral which, when computed at its market value, shall be at least 10 percent more than the amount of the excess deposit at the close of the banking day. Condition - During our audit we noted Authority had bank deposits in the amount of $134,801 which were not insured or collateralized according to HUD requirements and $220,173 was uncollateralized according to State Statute as of December 31, 2023. Cause – The Authority’s internal controls over the monitoring of deposits that exceed the FDIC threshold were not adequate. Effect or Potential Effect: The Authority was in noncompliance with HUD regulations and State Statute. Recommendation - We recommend the Authority review its collateral needs on a quarterly basis to determine that pledging requirements are adequate to ensure compliance with HUD requirements and State Statute. View of Responsible Official: Management agrees with the Finding.

Finding 2023-002: Eligibility Public Housing Program, Assistance Listing #14.850 Material Weakness Criteria – In accordance with the Public Housing Program there are three core occupancy procedures which are described in program regulations and other guidance : (1) determination eligibility; (2) determination of income and rent; and (3) leasing and continuing occupancy. Condition – During our audit of tenant files in the Public Housing Program, we noted there was no evidence noted in the files where a supervisory review procedure had been implemented. It appears the occupancy procedures related to the tenant files were being done by one person. It is important that a supervisory review occur to ensure compliance is maintained. Cause – The Authority has not performed a risk assessment on noncompliance that could occur if a proper control mechanism has not been implemented. Effect or Potential Effect - The inadequate review of the tenant files could lead to noncompliance with HUD Eligibility requirements. Recommendation - We recommend the Authority review its internal controls over tenant files to ensure the Authority continues compliance with Eligibility requirements. In addition in the event the staff member who works on the tenant files is unable to continue or there is a turnover in the position, the proper training can be maintained. View of Responsible Official: Management agrees with the Finding.

Finding 2023-001, Collateralization of Deposits Public Housing Program, Assistance Listing #14.850 Material Weakness/Noncompliance Criteria – As required by HUD Cash Management Policies PIH Notice 96-33, the Authority is required to have the financial institution continuously and fully secure all deposits whether regular, savings, or time that are in excess of the $250,000 FDIC insured amount. In addition, as required by Minn. Stat. Section 118A.03, the Authority must obtain a bond or collateral which, when computed at its market value, shall be at least 10 percent more than the amount of the excess deposit at the close of the banking day. Condition - During our audit we noted Authority had bank deposits in the amount of $134,801 which were not insured or collateralized according to HUD requirements and $220,173 was uncollateralized according to State Statute as of December 31, 2023. Cause – The Authority’s internal controls over the monitoring of deposits that exceed the FDIC threshold were not adequate. Effect or Potential Effect: The Authority was in noncompliance with HUD regulations and State Statute. Recommendation - We recommend the Authority review its collateral needs on a quarterly basis to determine that pledging requirements are adequate to ensure compliance with HUD requirements and State Statute. View of Responsible Official: Management agrees with the Finding.

Finding 2023-002: Eligibility Public Housing Program, Assistance Listing #14.850 Material Weakness Criteria – In accordance with the Public Housing Program there are three core occupancy procedures which are described in program regulations and other guidance : (1) determination eligibility; (2) determination of income and rent; and (3) leasing and continuing occupancy. Condition – During our audit of tenant files in the Public Housing Program, we noted there was no evidence noted in the files where a supervisory review procedure had been implemented. It appears the occupancy procedures related to the tenant files were being done by one person. It is important that a supervisory review occur to ensure compliance is maintained. Cause – The Authority has not performed a risk assessment on noncompliance that could occur if a proper control mechanism has not been implemented. Effect or Potential Effect - The inadequate review of the tenant files could lead to noncompliance with HUD Eligibility requirements. Recommendation - We recommend the Authority review its internal controls over tenant files to ensure the Authority continues compliance with Eligibility requirements. In addition in the event the staff member who works on the tenant files is unable to continue or there is a turnover in the position, the proper training can be maintained. View of Responsible Official: Management agrees with the Finding.