2 CFR § 2400.101 provides that unless excepted under 24 CFR chapter I through IX, the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth in 2 CFR part 200, shall apply to Federal Awards made by the Department of Housing and Urban Development to non-Federal entities. 2 CFR § 200.403 factors affecting allowability of costs states, in part, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles…and (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. 24 CFR § 982.161(a)(2) provides that neither the Public Housing Authority (PHA) nor any of its contractors or subcontractors may enter into any contract or arrangement in connection with the Housing Choice Voucher program in which any of the following classes of persons has any interest, direct or indirect, during tenure or for one year thereafter: Any employee of the PHA, or any contractor, subcontractor or agent of the PHA, who formulates policy or who influences decisions with respect to the programs. The Ashtabula Metropolitan Housing Authority’s Administrative Plan for its Housing Choice Voucher program provides in section 3.4 that the Executive Director or designated representative reviews and provides decisions regarding grievances for a tenant’s request for an auxiliary aid or services, provides in section 5.1.3 that the Executive Director, Resident Coordinator, or designated appointee will perform an informal review if an applicant is determined ineligible, and provides in section 9.3 that applicants being denied housing for abusive behavior must be reviewed and approved by the Executive Director. The Administrative Plan further provides in section 10.11 that only the Executive Director or his/her designee can grant an additional extension beyond suspension time for the term of a voucher, provides in section 11.3 that if the Resident Coordinator is not available or conflicted, the Executive Director will serve as the hearing officer and may also overturn or modify a decision in light of certain circumstances, and provides in section 18.1.4 that the Executive Director or his designee will perform quality control inspections on the number of participant files required by the Section 8 Management Assessment Program. Additionally, the Administrative Plan provides in section 18.1.6 that the Executive Director or his designee may approve an extension beyond thirty days for major repairs, provides in section 21.1.1 that the Executive Director or his/her designee may approve any terms allowing more time for repayment or for a lower down payment, provides in section 21.1.3 that if a family owes $10,000.00 or more, the Executive Director and the Board of Commissioners may refer the case for criminal prosecution, and lastly provides that complaints from members of the public may file complaints against owners, tenants, and employees of the Authority to the Executive Director. The following was noted for the year ended December 31, 2024: • For 1 of 40 (2.5%) transactions tested, totaling $3,767, the Executive Director approved/authorized payments for processing relating to housing he himself owned. Upon further review, it was noted that a total of $44,983 was paid to the Executive Director through the Housing Voucher Cluster Program for the fiscal year. This issue was also noted in our prior year report, however as of November 2024, the Executive Director recused himself from the approval of these payments, and they are now reviewed and authorized by two designated Board members. Furthermore, the Executive Director has sold these properties for the fiscal year 2025 and no longer owns any properties that receive monies from the Authority. Therefore, we consider the payments to the Executive Director prior to November 2024, in the amount of $37,662, to be those monies that constitute questioned costs. The Executive Director influences decisions with regards to the Housing Choice Voucher program pursuant to the Ashtabula Metropolitan Housing Authority’s Administrative Plan. The above payments to the Executive Director do not meet the criteria of being reasonable. In addition, with the Executive Director approving the payments, the control environment and processes for allowable costs are ineffective in preventing or detecting the above noncompliance and other potential noncompliance with the payments that are made through the program by the Authority. Failure to have alternative controls in place for approval and failure to adhere to the Authority's policies governing such transactions allowed these activities to go undetected for the majority of the audit period. This lack of controls could have resulted in potential findings for recovery, additional questioned costs, and referrals to the Ohio Ethics Commission. The Authority should review the Authority's administrative plan for their conflict of interest policy. The Authority should develop a formal policy regarding related party transactions to govern transactions in which employees of the Authority, including members of the Board, may have a personal interest and ensure they consult with legal counsel, Ohio Ethics Commission, and the Department of Housing and Urban Development when a potential conflict is identified.