Criteria:Proper documentation is necessary in purchasing and procurement to ensure accountability, to prevent duplication of payments, and to detect fraud and prevent other errors from occurring.Condition:There were missing invoices and missing copies of check stubs. The fee accountant had to recreate financial records from the bank statements which included copies of canceled checks. In addition, contracts could not be located for maintenance contracts so it could not be determined if the amounts paid were in excess of contract amounts.Effect:Lack of proper documentation could result in undetected fraud, errors, and incomplete financial information.Cause:Lack of oversight by management and the Board.Recommendation:Invoices and other records should be safeguarded to prevent fraud and errors and to insure financial information is complete and accurate.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors' comments, and the following action will be taken to improve the situation. This situation was created when the previous administration removed all records and were not made available to the auditors after several requests. KMHA has taken the following actions:KMHA's Board has approved new written policies and procedures and are in place now.Appropriate staff have begun taking proper safeguards for purchasing and procurement actions to ensure proper accountability. The new policy addresses the three types of procurement under CFR 200.320 informal and formal procurement and noncompetitive procurement. Thresholds have been set for Micro purchases and thus simplified procurement under informal practices. Formal methods include Sealed bids and Proposals when sealed bids are not appropriate.All checks are handled in accordance with the new check writing policy and have the necessary documentation to support the purchase and is filed in such a manner to be available for future reviews. This documentation will be made available to the Authority's fee accountant.All procurement actions will be handled in accordance with the new procurement policy and CFR 200.
Criteria:Backups for deposits made were not available.Condition:Deposit backups were not available, so the fee accountant had to recreate financial records from the bank statements which included copies of the deposit slips, but these copies were incomplete.Effect:Lack of proper documentation could result in undetected fraud, errors, and incomplete financial information.Cause:Lack of oversight by management and the Board.Recommendation:The Authority should have access to records and reports which include information to show what each deposit was for and who the payments were from.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors' comments, and the following action will be taken to improve the situation. This situation was created when the previous administration removed all records and were not made available to the auditors after several requests. KMHA has taken the following actions.KMHA's Board has approved new written policies and procedures and are in place now.Appropriate staff have begun taking proper safeguards for deposits and bank reconciliations to ensure proper accountability. Bank statements will be provided directly to the Fee Accountant monthly. The reconciliation of all bank accounts in a timely manner is a key component of good controls over cash. The reconciliation of the bank balance with the book balance (i.e., general ledger) is necessary to ensure that:All receipts and disbursements are recorded, which is an essential process for ensuring complete and accurate monthly financial statements;Checks are clearing the bank in a reasonable timeframe;Items reconciled are appropriate and are being recorded;Fraudulent claims can be discovered and investigated; and Reconciled cash balance agrees to the general ledger cash balance.Each bank account will be reconciled by the fee accountant returned. This documentation will be made available to the Authority's auditor.
Criteria:As required by the Budget and Fiscal Control Act and the terms of the annual contributions contract with HUD, the Authority is required to have an annual budget for all enterprise funds.Condition:For the year ended September 30, 2024 the Authority was unable to locate an annual budget in the accounting records.Effect:Expenditures were not controlled as they were not budget approved.Cause:Lack of oversight by management and the Board.Recommendation:The Authority should adopt an annual budget prior to each fiscal year.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors’ comment, and the following action will be taken to improve the situation. This situation was created when the previous administration removed all records and were not made available to the auditors after several requests. KMHA has taken the following actions.A budget for FYE 9/30/25 was approved by the Board in the October 2024 meeting.
Criteria:According to North Carolina G.S. 159-29, which were rewritten by Section 9 of Session Law 2022-53, effectiver on January 1, 2023, and applied to all fidelity bonds renewed after that date, a finance officer should be bonded for an amount of the greater of $50,000 or 10% of the unit's annual budget, up to $1,000,000.Condition:For the year ended September 30, 2024 no information could be obtained to show that the finance officer was bonded and in fact it appears taht there may have been a lapse in all insureance coverage due to nonpayment of preiums.Effect:Misappropriation or loss of assets due to lacke of insurance coverage.Cause:Lack of oversight by the Board.Recommendation:The Authority needs to insure that all policies premiums are paid up and insurance coverage has been reinstated. Bonding of the finance officer should be at required levels.Views of Responsible Officials and Planned Corrective Actions:We agree with this finding and the Authority will increase the amount of the fidelity bond and insure that all insurance policies are up to date.
Criteria:Proper documentation and maintaining adequate files are necessary in purchasing and procurement, and required by federal granting agencies, to ensure accountability, to prevent duplication of payments, and to detect fraud and prevent other errors from occurring.Condition:Grant expenses and drawdowns for the Capital Fund Program were not verifiable due to lack of original documentation.Effect:Mismanagement of files and lack of proper documentation is necessary to detect fraud and prevent other errors from occurring.Cause:Lack of oversight by management and the Board.Recommendation:Documentation should be maintained for all expenses, including grant reimbursement requests and required federal government forms and reports. Each reimbursement request and advanced funds should have all required documentation (invoices, contracts, eligibility, payroll records, etc.) attached to the request or the funds received to support those funds.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors' comments, and the following action will be taken to improve the situation. This situation was created when the previous administration removed all records and were not made available to the auditors after several requests. KMHA has taken the following actions.1. KMHA's Board has approved new written policies and procedures and are in place now.2. Appropriate staff have begun taking proper safeguards for Capital Fund Program management to ensure proper accountability. This includes the oversight of processing payments of CFP expenditures, which includes the following procedures for: 1) payment of invoices; 2) requisition of funds; 3) monitoring; and 4) reporting of CFP funds.Payment of InvoicesAll CFP invoices will be reviewed and clearly marked as approved and documented to show that the source of funds for payment are CFP grant funds by the Executive Director prior to payment. The Executive Director will specify the general ledger code, including the BLI account to be used for payment processing on the invoice before providing the invoice to the accounts payable clerk.Under no circumstances will a payment be made if KMHA has not drawdown and received the respective CFP funds.With the exception of funds associated with BLI 1406 “Operations”, PHAs have three (3) business days to issue and mail the check once the CFP funds are received.The Executive Director/accounts payable clerk will specify the BLI account and CFP grant year on the check voucher prior to sending the check voucher to the fee accountant for financial statement processing.Requisition of FundsFor each drawdown, the Executive Director will print the associated eLOCCS Voucher Payment form from the eLOCCS system.The Executive Director will document the check number(s) and vendor(s) associated with each CFP draw (i.e., the eLOCCS Voucher Payment form). In addition, each individual draw shall be numbered for reference purposes.A copy of each draw shall be submitted to the fee accountant to ensure proper reporting of the grant drawdown.With the exception of funds associated with BLI 1406 “Operations”, in no case shall a draw be made without the proper approved invoices.MonitoringThe fee accountant's monthly financial statements will include a CFP report for each grant which will be reviewed by the Executive Director for proper coding and accuracy.Folder has been created to track all required information in the management of a CFP grant to include correspondence to and from HUD, expenses, grant reimbursements, budgets, closeout documentation and EPIC management.
Criteria:Tenant files for Low Rent Public Housing are required to undergo recertification every 12 months and include a list of required forms signed by the tenant. In addition, each tenant file should have documentation showing that they were included on a wait list and how their selection was made. Condition:Of the tenant files examined for testing, seven tenants had moved in during the year of the audit and none of them contained documentation relating to the wait list and how they were selected. In addition, one tenant file was missing signed forms relating to privacy and release authorization forms. Effect:Required procedures for tenant selection and maintaining of tenant documentation were not being followed. Cause: Lack of oversight by management and the Board. Recommendation:A checklist of required documentation should be included in each tenant file to ensure all forms are included and properly signed. In addition, a copy of the applicable waitlist included selection process should be with each tenant file.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors' comments, and the following action will be taken to improve the situation. This situation was created when the previous administration failed to maintain all tenant records in accordance with HUD/CFR requirements. KMHA has taken the following actions.1. KMHA's Board has approved new written Tenant policies and procedures, to include a new ACOP (CFR 960), and are in place now.2. Appropriate staff have begun taking proper safeguards to ensure a waiting list is in place and utilized, each tenant application is filed and proper action taken and tenant files are properly maintained and complete. A checklist is placed inside each tenant file to assist in completeness.
Criteria:The Authority is required to retain documentation used in the calculation of the utility expense level that is used to calculate the utility portion of the operating fund subsidy.Condition:For the funding period 2024, no documentation was available to test the actual consumption of the utilities for the applicable period (July 1, 2022 – June 30, 2023).Effect:Lack of proper documentation could lead to an improper operating fund subsidy calculation. Cause:Lack of oversight by management and the Board.Recommendation:Documentation should be maintained for all utility payments made to ensure that the proper utility expense level for the operating fund subsidy is correct.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors' comments, and the following action will be taken to improve the situation. This situation was created when the previous administration failed to maintain proper records on utility consumption.Currently, the Authority is tracking all utility consumption for future OpFund application.
Criteria:Proper documentation is necessary in purchasing and procurement to ensure accountability, to prevent duplication of payments, and to detect fraud and prevent other errors from occurring.Condition:There were missing invoices and missing copies of check stubs. The fee accountant had to recreate financial records from the bank statements which included copies of canceled checks. In addition, contracts could not be located for maintenance contracts so it could not be determined if the amounts paid were in excess of contract amounts.Effect:Lack of proper documentation could result in undetected fraud, errors, and incomplete financial information.Cause:Lack of oversight by management and the Board.Recommendation:Invoices and other records should be safeguarded to prevent fraud and errors and to insure financial information is complete and accurate.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors' comments, and the following action will be taken to improve the situation. This situation was created when the previous administration removed all records and were not made available to the auditors after several requests. KMHA has taken the following actions:KMHA's Board has approved new written policies and procedures and are in place now.Appropriate staff have begun taking proper safeguards for purchasing and procurement actions to ensure proper accountability. The new policy addresses the three types of procurement under CFR 200.320 informal and formal procurement and noncompetitive procurement. Thresholds have been set for Micro purchases and thus simplified procurement under informal practices. Formal methods include Sealed bids and Proposals when sealed bids are not appropriate.All checks are handled in accordance with the new check writing policy and have the necessary documentation to support the purchase and is filed in such a manner to be available for future reviews. This documentation will be made available to the Authority's fee accountant.All procurement actions will be handled in accordance with the new procurement policy and CFR 200.
Criteria:Backups for deposits made were not available.Condition:Deposit backups were not available, so the fee accountant had to recreate financial records from the bank statements which included copies of the deposit slips, but these copies were incomplete.Effect:Lack of proper documentation could result in undetected fraud, errors, and incomplete financial information.Cause:Lack of oversight by management and the Board.Recommendation:The Authority should have access to records and reports which include information to show what each deposit was for and who the payments were from.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors' comments, and the following action will be taken to improve the situation. This situation was created when the previous administration removed all records and were not made available to the auditors after several requests. KMHA has taken the following actions.KMHA's Board has approved new written policies and procedures and are in place now.Appropriate staff have begun taking proper safeguards for deposits and bank reconciliations to ensure proper accountability. Bank statements will be provided directly to the Fee Accountant monthly. The reconciliation of all bank accounts in a timely manner is a key component of good controls over cash. The reconciliation of the bank balance with the book balance (i.e., general ledger) is necessary to ensure that:All receipts and disbursements are recorded, which is an essential process for ensuring complete and accurate monthly financial statements;Checks are clearing the bank in a reasonable timeframe;Items reconciled are appropriate and are being recorded;Fraudulent claims can be discovered and investigated; and Reconciled cash balance agrees to the general ledger cash balance.Each bank account will be reconciled by the fee accountant returned. This documentation will be made available to the Authority's auditor.
Criteria:As required by the Budget and Fiscal Control Act and the terms of the annual contributions contract with HUD, the Authority is required to have an annual budget for all enterprise funds.Condition:For the year ended September 30, 2024 the Authority was unable to locate an annual budget in the accounting records.Effect:Expenditures were not controlled as they were not budget approved.Cause:Lack of oversight by management and the Board.Recommendation:The Authority should adopt an annual budget prior to each fiscal year.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors’ comment, and the following action will be taken to improve the situation. This situation was created when the previous administration removed all records and were not made available to the auditors after several requests. KMHA has taken the following actions.A budget for FYE 9/30/25 was approved by the Board in the October 2024 meeting.
Criteria:According to North Carolina G.S. 159-29, which were rewritten by Section 9 of Session Law 2022-53, effectiver on January 1, 2023, and applied to all fidelity bonds renewed after that date, a finance officer should be bonded for an amount of the greater of $50,000 or 10% of the unit's annual budget, up to $1,000,000.Condition:For the year ended September 30, 2024 no information could be obtained to show that the finance officer was bonded and in fact it appears taht there may have been a lapse in all insureance coverage due to nonpayment of preiums.Effect:Misappropriation or loss of assets due to lacke of insurance coverage.Cause:Lack of oversight by the Board.Recommendation:The Authority needs to insure that all policies premiums are paid up and insurance coverage has been reinstated. Bonding of the finance officer should be at required levels.Views of Responsible Officials and Planned Corrective Actions:We agree with this finding and the Authority will increase the amount of the fidelity bond and insure that all insurance policies are up to date.
Criteria:Proper documentation and maintaining adequate files are necessary in purchasing and procurement, and required by federal granting agencies, to ensure accountability, to prevent duplication of payments, and to detect fraud and prevent other errors from occurring.Condition:Grant expenses and drawdowns for the Capital Fund Program were not verifiable due to lack of original documentation.Effect:Mismanagement of files and lack of proper documentation is necessary to detect fraud and prevent other errors from occurring.Cause:Lack of oversight by management and the Board.Recommendation:Documentation should be maintained for all expenses, including grant reimbursement requests and required federal government forms and reports. Each reimbursement request and advanced funds should have all required documentation (invoices, contracts, eligibility, payroll records, etc.) attached to the request or the funds received to support those funds.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors' comments, and the following action will be taken to improve the situation. This situation was created when the previous administration removed all records and were not made available to the auditors after several requests. KMHA has taken the following actions.1. KMHA's Board has approved new written policies and procedures and are in place now.2. Appropriate staff have begun taking proper safeguards for Capital Fund Program management to ensure proper accountability. This includes the oversight of processing payments of CFP expenditures, which includes the following procedures for: 1) payment of invoices; 2) requisition of funds; 3) monitoring; and 4) reporting of CFP funds.Payment of InvoicesAll CFP invoices will be reviewed and clearly marked as approved and documented to show that the source of funds for payment are CFP grant funds by the Executive Director prior to payment. The Executive Director will specify the general ledger code, including the BLI account to be used for payment processing on the invoice before providing the invoice to the accounts payable clerk.Under no circumstances will a payment be made if KMHA has not drawdown and received the respective CFP funds.With the exception of funds associated with BLI 1406 “Operations”, PHAs have three (3) business days to issue and mail the check once the CFP funds are received.The Executive Director/accounts payable clerk will specify the BLI account and CFP grant year on the check voucher prior to sending the check voucher to the fee accountant for financial statement processing.Requisition of FundsFor each drawdown, the Executive Director will print the associated eLOCCS Voucher Payment form from the eLOCCS system.The Executive Director will document the check number(s) and vendor(s) associated with each CFP draw (i.e., the eLOCCS Voucher Payment form). In addition, each individual draw shall be numbered for reference purposes.A copy of each draw shall be submitted to the fee accountant to ensure proper reporting of the grant drawdown.With the exception of funds associated with BLI 1406 “Operations”, in no case shall a draw be made without the proper approved invoices.MonitoringThe fee accountant's monthly financial statements will include a CFP report for each grant which will be reviewed by the Executive Director for proper coding and accuracy.Folder has been created to track all required information in the management of a CFP grant to include correspondence to and from HUD, expenses, grant reimbursements, budgets, closeout documentation and EPIC management.
Criteria:Tenant files for Low Rent Public Housing are required to undergo recertification every 12 months and include a list of required forms signed by the tenant. In addition, each tenant file should have documentation showing that they were included on a wait list and how their selection was made. Condition:Of the tenant files examined for testing, seven tenants had moved in during the year of the audit and none of them contained documentation relating to the wait list and how they were selected. In addition, one tenant file was missing signed forms relating to privacy and release authorization forms. Effect:Required procedures for tenant selection and maintaining of tenant documentation were not being followed. Cause: Lack of oversight by management and the Board. Recommendation:A checklist of required documentation should be included in each tenant file to ensure all forms are included and properly signed. In addition, a copy of the applicable waitlist included selection process should be with each tenant file.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors' comments, and the following action will be taken to improve the situation. This situation was created when the previous administration failed to maintain all tenant records in accordance with HUD/CFR requirements. KMHA has taken the following actions.1. KMHA's Board has approved new written Tenant policies and procedures, to include a new ACOP (CFR 960), and are in place now.2. Appropriate staff have begun taking proper safeguards to ensure a waiting list is in place and utilized, each tenant application is filed and proper action taken and tenant files are properly maintained and complete. A checklist is placed inside each tenant file to assist in completeness.
Criteria:The Authority is required to retain documentation used in the calculation of the utility expense level that is used to calculate the utility portion of the operating fund subsidy.Condition:For the funding period 2024, no documentation was available to test the actual consumption of the utilities for the applicable period (July 1, 2022 – June 30, 2023).Effect:Lack of proper documentation could lead to an improper operating fund subsidy calculation. Cause:Lack of oversight by management and the Board.Recommendation:Documentation should be maintained for all utility payments made to ensure that the proper utility expense level for the operating fund subsidy is correct.Views of Responsible Officials and Planned Corrective Actions:We agree with the auditors' comments, and the following action will be taken to improve the situation. This situation was created when the previous administration failed to maintain proper records on utility consumption.Currently, the Authority is tracking all utility consumption for future OpFund application.