Finding 2024-002: Allowable Activities
Public Housing - 14.850, Housing Choice Voucher – 14.871
Material Weakness/Noncompliance – Activities Allowed or Unallowed
Repeat Finding: 2023-003.
Criteria: In the Public Housing program, transfers out of the operating fund can only occur in very limited circumstances. This would preclude the Authority from using operating funds to provide temporary loans to programs with the Authority. Interfund transactions indicate the existence of temporary loans.
In the Housing Choice Voucher program, the transfers of HAP, and associated administrative fees, even temporarily, to support another program or use are not allowed and could be considered a breach of the annual contributions contract.
Condition: The Public Housing program pays all the bills and is to be reimbursed by the Voucher program for its portion. During our audit, we noted the Voucher program was not reimbursing timely or for the full amount. The balance Voucher owed Public Housing had increased from $11,648.18 at June 30, 2023 to $23,142.26 at June
30, 2024 and in reviewing the general ledger, the balance was not being paid back monthly and had remained consistent throughout the year.
Further, we noted a lack of segregation of duties regarding allowable activities which could allow an unallowed activities to occur and not be identified in a timely fashion. The Authority indicated in the Summary Schedule of Prior Audit Findings this was corrected.
Cause: The Authority indicated its monthly financial reports were significantly behind and it was unaware of the amount to reimburse.
Effect or Potential Effect: Interprogram balances were not being repaid timely. Further, due to the lack of segregation of duties, the control deficiencies result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected.
Recommendation: The Authority should review its allocation system and document the justification for it. The justification should be relevant to the expense being allocated.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.
Finding 2024-002: Allowable Activities
Public Housing - 14.850, Housing Choice Voucher – 14.871
Material Weakness/Noncompliance – Activities Allowed or Unallowed
Repeat Finding: 2023-003.
Criteria: In the Public Housing program, transfers out of the operating fund can only occur in very limited circumstances. This would preclude the Authority from using operating funds to provide temporary loans to programs with the Authority. Interfund transactions indicate the existence of temporary loans.
In the Housing Choice Voucher program, the transfers of HAP, and associated administrative fees, even temporarily, to support another program or use are not allowed and could be considered a breach of the annual contributions contract.
Condition: The Public Housing program pays all the bills and is to be reimbursed by the Voucher program for its portion. During our audit, we noted the Voucher program was not reimbursing timely or for the full amount. The balance Voucher owed Public Housing had increased from $11,648.18 at June 30, 2023 to $23,142.26 at June
30, 2024 and in reviewing the general ledger, the balance was not being paid back monthly and had remained consistent throughout the year.
Further, we noted a lack of segregation of duties regarding allowable activities which could allow an unallowed activities to occur and not be identified in a timely fashion. The Authority indicated in the Summary Schedule of Prior Audit Findings this was corrected.
Cause: The Authority indicated its monthly financial reports were significantly behind and it was unaware of the amount to reimburse.
Effect or Potential Effect: Interprogram balances were not being repaid timely. Further, due to the lack of segregation of duties, the control deficiencies result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected.
Recommendation: The Authority should review its allocation system and document the justification for it. The justification should be relevant to the expense being allocated.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.
Finding 2024-003: Voucher Management System Reporting
Housing Choice Voucher – 14.871
Material Weakness/Noncompliance – Reporting
Repeat Finding 2023-006:
Criteria: The Authority must report monthly in the Voucher Management System (VMS) information related to number of vouchers and the dollar amount of HAP payments made that month along with a variety of other information. The Authority should have procedures to ensure the accuracy of that information reported.
Condition: During our audit, we noted the amount reported for HAP in the VMS system was higher than the amount reported on the general ledger. In reviewing the matter, we noted the Authority was including the “HAP after the first of the month” also in the “all other HAP” totals so those figures were reported twice. A similar issue occurred in the prior year with “tenant protection vouchers”. The responsibility for reporting this information is solely the responsibility of the Executive Director. The Authority indicated in the Summary Schedule of Prior Audit Findings this was corrected.
Cause: The Authority did not have procedures in place to review information submitted to identify and correct errors in reporting in a timely fashion.
Effect or Potential Effect: The Authority overreported HAP payments by $2,696 for the fiscal year ending June 30, 2024.
Recommendation: The Authority should review its system for reporting VMS data. Based on the limited administrative staff the Authority has effective controls may not be reasonably achieved.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.
Finding 2024-004: Internal Control Structure
Housing Choice Voucher, 14.871
Material Weakness – Eligibility, Reporting and Special Tests and Provisions
Criteria: The Authority is responsible for establishing an effective internal control process to ensure the Authority complies with the requirements governing the Housing Choice Voucher program.
Condition: The Authority has one employee that is responsible for the Housing Choice Voucher program tenant files which include income, deduction and HAP calculations, reporting and special tests and provisions such as rent reasonableness. The Authority has not established controls such as documented supervisory reviews which could be used to detect and prevent errors or noncompliance.
Cause: The Authority has not evaluated the risks related to errors or noncompliance and established internal control procedures the would prevent and detect errors and noncompliance.
Effect or Potential Effect: The control deficiencies are deficiencies that result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected
Recommendation: The Authority should review its procedures and establish control procedures to ensure compliance with Housing Choice Voucher rules and regulations. The control procedures should be documented.
View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.
Finding 2024-005: Deposit Collateralization
Housing Choice Voucher Program – 14.871
Material Weakness/Noncompliance – Special Tests and Provisions
Criteria: The Authority is required to enter into a current depository agreement with its financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third-party rights to HUD.
Condition: The Authority did have the appropriate HUD depository agreement with its financial institutions but did not monitor to ensure the collateral pledged was an indefinable U.S. Government or Agency security prescribed by HUD in a notice and as a result, collateral that did not meet the terms above were pledged.
Cause: The Authority was not monitoring to ensure the pledged collateral met the terms of the depository agreement.
Effect or Potential Effect: The Authority was in noncompliance with HUD’s requirements.
Recommendation: The Authority should review this situation with the bank in question and obtain appropriate collateral.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.
Finding 2024-002: Allowable Activities
Public Housing - 14.850, Housing Choice Voucher – 14.871
Material Weakness/Noncompliance – Activities Allowed or Unallowed
Repeat Finding: 2023-003.
Criteria: In the Public Housing program, transfers out of the operating fund can only occur in very limited circumstances. This would preclude the Authority from using operating funds to provide temporary loans to programs with the Authority. Interfund transactions indicate the existence of temporary loans.
In the Housing Choice Voucher program, the transfers of HAP, and associated administrative fees, even temporarily, to support another program or use are not allowed and could be considered a breach of the annual contributions contract.
Condition: The Public Housing program pays all the bills and is to be reimbursed by the Voucher program for its portion. During our audit, we noted the Voucher program was not reimbursing timely or for the full amount. The balance Voucher owed Public Housing had increased from $11,648.18 at June 30, 2023 to $23,142.26 at June
30, 2024 and in reviewing the general ledger, the balance was not being paid back monthly and had remained consistent throughout the year.
Further, we noted a lack of segregation of duties regarding allowable activities which could allow an unallowed activities to occur and not be identified in a timely fashion. The Authority indicated in the Summary Schedule of Prior Audit Findings this was corrected.
Cause: The Authority indicated its monthly financial reports were significantly behind and it was unaware of the amount to reimburse.
Effect or Potential Effect: Interprogram balances were not being repaid timely. Further, due to the lack of segregation of duties, the control deficiencies result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected.
Recommendation: The Authority should review its allocation system and document the justification for it. The justification should be relevant to the expense being allocated.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.
Finding 2024-002: Allowable Activities
Public Housing - 14.850, Housing Choice Voucher – 14.871
Material Weakness/Noncompliance – Activities Allowed or Unallowed
Repeat Finding: 2023-003.
Criteria: In the Public Housing program, transfers out of the operating fund can only occur in very limited circumstances. This would preclude the Authority from using operating funds to provide temporary loans to programs with the Authority. Interfund transactions indicate the existence of temporary loans.
In the Housing Choice Voucher program, the transfers of HAP, and associated administrative fees, even temporarily, to support another program or use are not allowed and could be considered a breach of the annual contributions contract.
Condition: The Public Housing program pays all the bills and is to be reimbursed by the Voucher program for its portion. During our audit, we noted the Voucher program was not reimbursing timely or for the full amount. The balance Voucher owed Public Housing had increased from $11,648.18 at June 30, 2023 to $23,142.26 at June
30, 2024 and in reviewing the general ledger, the balance was not being paid back monthly and had remained consistent throughout the year.
Further, we noted a lack of segregation of duties regarding allowable activities which could allow an unallowed activities to occur and not be identified in a timely fashion. The Authority indicated in the Summary Schedule of Prior Audit Findings this was corrected.
Cause: The Authority indicated its monthly financial reports were significantly behind and it was unaware of the amount to reimburse.
Effect or Potential Effect: Interprogram balances were not being repaid timely. Further, due to the lack of segregation of duties, the control deficiencies result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected.
Recommendation: The Authority should review its allocation system and document the justification for it. The justification should be relevant to the expense being allocated.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.
Finding 2024-003: Voucher Management System Reporting
Housing Choice Voucher – 14.871
Material Weakness/Noncompliance – Reporting
Repeat Finding 2023-006:
Criteria: The Authority must report monthly in the Voucher Management System (VMS) information related to number of vouchers and the dollar amount of HAP payments made that month along with a variety of other information. The Authority should have procedures to ensure the accuracy of that information reported.
Condition: During our audit, we noted the amount reported for HAP in the VMS system was higher than the amount reported on the general ledger. In reviewing the matter, we noted the Authority was including the “HAP after the first of the month” also in the “all other HAP” totals so those figures were reported twice. A similar issue occurred in the prior year with “tenant protection vouchers”. The responsibility for reporting this information is solely the responsibility of the Executive Director. The Authority indicated in the Summary Schedule of Prior Audit Findings this was corrected.
Cause: The Authority did not have procedures in place to review information submitted to identify and correct errors in reporting in a timely fashion.
Effect or Potential Effect: The Authority overreported HAP payments by $2,696 for the fiscal year ending June 30, 2024.
Recommendation: The Authority should review its system for reporting VMS data. Based on the limited administrative staff the Authority has effective controls may not be reasonably achieved.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.
Finding 2024-004: Internal Control Structure
Housing Choice Voucher, 14.871
Material Weakness – Eligibility, Reporting and Special Tests and Provisions
Criteria: The Authority is responsible for establishing an effective internal control process to ensure the Authority complies with the requirements governing the Housing Choice Voucher program.
Condition: The Authority has one employee that is responsible for the Housing Choice Voucher program tenant files which include income, deduction and HAP calculations, reporting and special tests and provisions such as rent reasonableness. The Authority has not established controls such as documented supervisory reviews which could be used to detect and prevent errors or noncompliance.
Cause: The Authority has not evaluated the risks related to errors or noncompliance and established internal control procedures the would prevent and detect errors and noncompliance.
Effect or Potential Effect: The control deficiencies are deficiencies that result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected
Recommendation: The Authority should review its procedures and establish control procedures to ensure compliance with Housing Choice Voucher rules and regulations. The control procedures should be documented.
View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.
Finding 2024-005: Deposit Collateralization
Housing Choice Voucher Program – 14.871
Material Weakness/Noncompliance – Special Tests and Provisions
Criteria: The Authority is required to enter into a current depository agreement with its financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third-party rights to HUD.
Condition: The Authority did have the appropriate HUD depository agreement with its financial institutions but did not monitor to ensure the collateral pledged was an indefinable U.S. Government or Agency security prescribed by HUD in a notice and as a result, collateral that did not meet the terms above were pledged.
Cause: The Authority was not monitoring to ensure the pledged collateral met the terms of the depository agreement.
Effect or Potential Effect: The Authority was in noncompliance with HUD’s requirements.
Recommendation: The Authority should review this situation with the bank in question and obtain appropriate collateral.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.