Audit 34472

Finding 2022-001 ? Allowable Costs/Costs Principles ? Ineligible Wire Transfer ALN 14.182 Section 8 New Construction, Noncompliance & Material Weakness Criteria: Title 2, Part 200, Uniform Administrative Requirements, states that the entity should ?establish and maintain effective internal control over the Federal award and provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes.? This requirement also specifies that type of payments allowed and the controls over those payments. Condition & Cause: We noted that the client entered $351,532 on the Unaudited Financial Data Schedule into line 97500 Fraud Losses. We inquired into the nature of this account and it came to our attention that the client was the victim of wire fraud during FY 2022. The previous Executive Director was sent a fictitious email under the guise of their RAD conversion vendor Gibraltar Construction. The client had never previously wired this vendor payment and failed to verify the authenticity of this disbursement. Due to this it has been concluded that the client will likely not recover this amount. The previous Executive Director has since retired. Effect: Poor internal controls over wire transfers can result in a significant loss of funds which are restricted by both Federal and State regulations. Recommendation: We recommend that the Housing Authority implement better controls over wire transfers and ACH banking procedures. Typically, when changes to payment method are requested over email, the Housing Authority should have alternative means to identify the legitimacy of the instructions and the transaction. Questioned Costs: $351,532 Repeat Finding: No Views of responsible officials: The PHA agrees with the results of the audit and recommendation.

Finding 2022-002 ? Accounting Controls ? Timeliness of Financial Statement Preparation ALN 14.182 Section 8 New Construction, Noncompliance & Material Weakness Criteria: Regulations at 24 CFR Part 5 describe the reporting requirements for Housing Authority?s that are recipients of Section 8 project-based housing grants. PHA?s that serve as contract administrators for the funding must submit financial information to HUD within sixty (60) days of the end of the reporting period. Condition & Cause: We noted that the client did not submit the Unaudited Financial Data Schedule to HUD within sixty days of the reporting period?s end date. The unaudited FDS was submitted May 8, 2023, into the HUD REAC online system with an original due date of November 30, 2022. This is largely due to staff turnover and other unexpected circumstances. Effect: Non-compliance and reporting deficiencies of the entity financial statements. Recommendation: We recommend that the Housing Authority review HUD reporting guidelines and submit these reports in a timely fashion. Questioned Costs: N/A Repeat Finding: No Views of responsible officials: The PHA agrees with the results of the audit and recommendation.

Finding 2022-001 ? Allowable Costs/Costs Principles ? Ineligible Wire Transfer ALN 14.182 Section 8 New Construction, Noncompliance & Material Weakness Criteria: Title 2, Part 200, Uniform Administrative Requirements, states that the entity should ?establish and maintain effective internal control over the Federal award and provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes.? This requirement also specifies that type of payments allowed and the controls over those payments. Condition & Cause: We noted that the client entered $351,532 on the Unaudited Financial Data Schedule into line 97500 Fraud Losses. We inquired into the nature of this account and it came to our attention that the client was the victim of wire fraud during FY 2022. The previous Executive Director was sent a fictitious email under the guise of their RAD conversion vendor Gibraltar Construction. The client had never previously wired this vendor payment and failed to verify the authenticity of this disbursement. Due to this it has been concluded that the client will likely not recover this amount. The previous Executive Director has since retired. Effect: Poor internal controls over wire transfers can result in a significant loss of funds which are restricted by both Federal and State regulations. Recommendation: We recommend that the Housing Authority implement better controls over wire transfers and ACH banking procedures. Typically, when changes to payment method are requested over email, the Housing Authority should have alternative means to identify the legitimacy of the instructions and the transaction. Questioned Costs: $351,532 Repeat Finding: No Views of responsible officials: The PHA agrees with the results of the audit and recommendation.

Finding 2022-002 ? Accounting Controls ? Timeliness of Financial Statement Preparation ALN 14.182 Section 8 New Construction, Noncompliance & Material Weakness Criteria: Regulations at 24 CFR Part 5 describe the reporting requirements for Housing Authority?s that are recipients of Section 8 project-based housing grants. PHA?s that serve as contract administrators for the funding must submit financial information to HUD within sixty (60) days of the end of the reporting period. Condition & Cause: We noted that the client did not submit the Unaudited Financial Data Schedule to HUD within sixty days of the reporting period?s end date. The unaudited FDS was submitted May 8, 2023, into the HUD REAC online system with an original due date of November 30, 2022. This is largely due to staff turnover and other unexpected circumstances. Effect: Non-compliance and reporting deficiencies of the entity financial statements. Recommendation: We recommend that the Housing Authority review HUD reporting guidelines and submit these reports in a timely fashion. Questioned Costs: N/A Repeat Finding: No Views of responsible officials: The PHA agrees with the results of the audit and recommendation.