Audit 356963

Most of the audit year was under the direction of an Interim Director. The current Executive Director began on July 1, 2024. Section Eight Housing Choice Voucher Program-CDFA#14.871 and Low Rent Program-CDFA#14.850 Finding 2024-001-Insufficent Restricted Cash and Deficit in Unrestricted Net Position-Allowable Costs Criteria and Condition HUD designates the Housing Choice Voucher advances to be in two categories: (a)-strictly to be used for HAP payments and (b)-to be used to pay for all non-HAP payment expenses identified with the HCV program. The (b) portion is considered Unrestricted HAP equity. When this number is a negative, this means that the HCV program has spent more than it should have. At September 30, 2024, the deficit as shown on page 11, of the Statement of Net Position, is $103,785. Context The $190,020 of restricted cash in the HCV program is $16,765 for HAP payments and $173,255 of remaining DHAP disaster funds which can only be spent with the permission of HUD. In addition, the HCV program has $410,700 of unrestricted cash. However, the HCV owes the General Fund (Low Rent) program a greater amount, $546,722, as shown on page 11 of the Statement of Position. Therefore, there are no available funds to cover the deficit of $103,875. Interfund amounts should be periodically reduced to close to zero. If not, an indefinite interfund due to is characterized as a permanent transfer between funds, which is not allowed per HUD regulations. Effect The authority has incurred and paid $103,785 (the deficit amount) more for HCV overhead than it should have. Cause It appears that the authority is paying a significant amount for consulting fees that is included in administrative expense. This is at least part of the issue. Questioned Costs None Recommendation The authority should seek ways to reduce the overhead expenses associated with the HCV program. Consulting fees in particular should be reviewed. $75,369 paid in the audit year to one consulting firm was charged to the HCV program. An additional amount of $101,401 was paid to the same firm from the General (Low Rent) Fund. The amount paid by this authority for consulting fees, even with an ongoing RAD conversion, appears to be excessive, in our opinion. View of Responsible Official and Planned Corrective Action I am Jedidiah Jackson. I was hired as Executive Director and started July 1, 2024. I believe that many of the issues noted in this audit have been corrected and I am working on the remaining issues.

Low Rent Program-CDFA#14.850, Section Eight Housing Choice Voucher Program-CDFA#14.871 Finding 2024-002-Internal Controls Inadequate for Disbursements-Allowable Costs Criteria and Condition Good internal controls should be in place to make sure that disbursements are for eligible payments, are correctly classified, and are timely paid. Good controls ensure that there is proper, documented review of all of these functions. Records should be maintained in an order that is conducive to efficient and timely summarizing by the outside fee accounting firm. Unaudited financial statements should be produced on a timely basis, and reviewed timely by the board of commissioners. Context In our initial sample of sixty disbursements that totaled $440,228, ten of the sixty were unsupported. The unsupported totaled $10,718. Of the total VISA payments of $20,060, $15,179 were unsupported. A total of $25,897 in our tests were unsupported. Effect Unsupported payments were made. Cause These issues have been noticed with this entity for years. Questioned Costs $25,897 Recommendation Management should make sure that all disbursements are adequately supported. View of Responsible Official and Planned Corrective Action We will comply with the auditor’s suggestions.

Most of the audit year was under the direction of an Interim Director. The current Executive Director began on July 1, 2024. Section Eight Housing Choice Voucher Program-CDFA#14.871 and Low Rent Program-CDFA#14.850 Finding 2024-001-Insufficent Restricted Cash and Deficit in Unrestricted Net Position-Allowable Costs Criteria and Condition HUD designates the Housing Choice Voucher advances to be in two categories: (a)-strictly to be used for HAP payments and (b)-to be used to pay for all non-HAP payment expenses identified with the HCV program. The (b) portion is considered Unrestricted HAP equity. When this number is a negative, this means that the HCV program has spent more than it should have. At September 30, 2024, the deficit as shown on page 11, of the Statement of Net Position, is $103,785. Context The $190,020 of restricted cash in the HCV program is $16,765 for HAP payments and $173,255 of remaining DHAP disaster funds which can only be spent with the permission of HUD. In addition, the HCV program has $410,700 of unrestricted cash. However, the HCV owes the General Fund (Low Rent) program a greater amount, $546,722, as shown on page 11 of the Statement of Position. Therefore, there are no available funds to cover the deficit of $103,875. Interfund amounts should be periodically reduced to close to zero. If not, an indefinite interfund due to is characterized as a permanent transfer between funds, which is not allowed per HUD regulations. Effect The authority has incurred and paid $103,785 (the deficit amount) more for HCV overhead than it should have. Cause It appears that the authority is paying a significant amount for consulting fees that is included in administrative expense. This is at least part of the issue. Questioned Costs None Recommendation The authority should seek ways to reduce the overhead expenses associated with the HCV program. Consulting fees in particular should be reviewed. $75,369 paid in the audit year to one consulting firm was charged to the HCV program. An additional amount of $101,401 was paid to the same firm from the General (Low Rent) Fund. The amount paid by this authority for consulting fees, even with an ongoing RAD conversion, appears to be excessive, in our opinion. View of Responsible Official and Planned Corrective Action I am Jedidiah Jackson. I was hired as Executive Director and started July 1, 2024. I believe that many of the issues noted in this audit have been corrected and I am working on the remaining issues.

Low Rent Program-CDFA#14.850, Section Eight Housing Choice Voucher Program-CDFA#14.871 Finding 2024-002-Internal Controls Inadequate for Disbursements-Allowable Costs Criteria and Condition Good internal controls should be in place to make sure that disbursements are for eligible payments, are correctly classified, and are timely paid. Good controls ensure that there is proper, documented review of all of these functions. Records should be maintained in an order that is conducive to efficient and timely summarizing by the outside fee accounting firm. Unaudited financial statements should be produced on a timely basis, and reviewed timely by the board of commissioners. Context In our initial sample of sixty disbursements that totaled $440,228, ten of the sixty were unsupported. The unsupported totaled $10,718. Of the total VISA payments of $20,060, $15,179 were unsupported. A total of $25,897 in our tests were unsupported. Effect Unsupported payments were made. Cause These issues have been noticed with this entity for years. Questioned Costs $25,897 Recommendation Management should make sure that all disbursements are adequately supported. View of Responsible Official and Planned Corrective Action We will comply with the auditor’s suggestions.