Audit 348840

2024-001 – SPECIAL TESTS & PROVISIONS: GENERAL DEPOSITORY AGREEMENTS Other Matter/Significant Deficiency U.S. Department of Housing and Urban Development ALN #: 14.871 – Housing Voucher Cluster CRITERIA PHAs are required to enter into depository agreements with their financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third party rights to HUD. Among the terms in many agreements are requirements for funds to be placed in an interest-bearing account (24CFR section 982.156). CONDITION As a result of our audit, we identified that the Authority does not have an executed General Depository Agreement on file for all depositories of federal funds. CAUSE The Authority experienced few turnovers including its Executive Director position, due to which certain documentation and information could not be located by the Authority personnel. EFFECT The covenants set forth by the General Depository Agreement have not been conveyed to and agreed upon by the Authority and its financial institutions. QUESTIONED COSTS None identified. CONTEXT The Authority does not have an executed General Depository Agreement on file for all depositories of federal funds. REPEAT FINDING This is not a repeat finding. RECOMMENDATION We recommend that the Authority obtain signed General Depository Agreement in form approved by HUD from their financial institutions with whom they have deposits of federal funds. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.

2024-002 – ALLOWABLE COSTS/COST PRINCIPLES Other Matter/Significant Deficiency U.S. Department of Housing and Urban Development ALN #: 14.871 – Housing Voucher Cluster CRITERIA According to 2 CFR 200.405(d) (Uniform Guidance), costs must be allocated to the federal award in accordance with the relative benefits received. The allocation methods used must be reasonable and documented to ensure that each federal award bears its fair share of costs. CONDITION The Authority's cost allocation plan is lacking in detail and relies on a secondary layer of interfund operating transfers in order to fund the deficits that result in certain programs. This approach would be obsolete under a revised and simplified cost allocation plan. CAUSE The Authority has not considered a more equitable cost allocation approach, such as one based on direct salaries. EFFECT The cost allocation approach that is currently utilized is prone to a misallocation of funds due to the overly complex nature of the methodology. QUESTIONED COSTS None identified. CONTEXT We considered the Authority's cost allocation plan as an activity-level control covering all of the Authority's expenditures. REPEAT FINDING This is not a repeat finding. RECOMMENDATION We recommend the Authority develop and document a comprehensive expense allocation policy that complies with Uniform Guidance requirements. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.

2024-001 – SPECIAL TESTS & PROVISIONS: GENERAL DEPOSITORY AGREEMENTS Other Matter/Significant Deficiency U.S. Department of Housing and Urban Development ALN #: 14.871 – Housing Voucher Cluster CRITERIA PHAs are required to enter into depository agreements with their financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third party rights to HUD. Among the terms in many agreements are requirements for funds to be placed in an interest-bearing account (24CFR section 982.156). CONDITION As a result of our audit, we identified that the Authority does not have an executed General Depository Agreement on file for all depositories of federal funds. CAUSE The Authority experienced few turnovers including its Executive Director position, due to which certain documentation and information could not be located by the Authority personnel. EFFECT The covenants set forth by the General Depository Agreement have not been conveyed to and agreed upon by the Authority and its financial institutions. QUESTIONED COSTS None identified. CONTEXT The Authority does not have an executed General Depository Agreement on file for all depositories of federal funds. REPEAT FINDING This is not a repeat finding. RECOMMENDATION We recommend that the Authority obtain signed General Depository Agreement in form approved by HUD from their financial institutions with whom they have deposits of federal funds. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.

2024-002 – ALLOWABLE COSTS/COST PRINCIPLES Other Matter/Significant Deficiency U.S. Department of Housing and Urban Development ALN #: 14.871 – Housing Voucher Cluster CRITERIA According to 2 CFR 200.405(d) (Uniform Guidance), costs must be allocated to the federal award in accordance with the relative benefits received. The allocation methods used must be reasonable and documented to ensure that each federal award bears its fair share of costs. CONDITION The Authority's cost allocation plan is lacking in detail and relies on a secondary layer of interfund operating transfers in order to fund the deficits that result in certain programs. This approach would be obsolete under a revised and simplified cost allocation plan. CAUSE The Authority has not considered a more equitable cost allocation approach, such as one based on direct salaries. EFFECT The cost allocation approach that is currently utilized is prone to a misallocation of funds due to the overly complex nature of the methodology. QUESTIONED COSTS None identified. CONTEXT We considered the Authority's cost allocation plan as an activity-level control covering all of the Authority's expenditures. REPEAT FINDING This is not a repeat finding. RECOMMENDATION We recommend the Authority develop and document a comprehensive expense allocation policy that complies with Uniform Guidance requirements. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.