Audit 371934

2024-003 ALN 14.850 – Public Housing Operating Fund – Eligibility Condition and Criteria: The PHA is required to adhere to eligibility compliance requirements for all tenants participating in the Public Housing Operating Fund program. Specifically: Citizenship declaration forms, rent choice certification forms, and 50058 reports must be maintained for all tenants as part of the eligibility documentation. During testing, it was noted that the Authority did not have adequate internal controls designed to ensure compliance with eligibility requirements. Amount of Questioned Costs: None. Context: During our testing of a sample of 25 tenant files, it was noted that 12 files did not meet eligibility compliance requirements.  3 instances of files missing citizenship declaration forms  8 instances of files missing rent choice certification forms  1 instance of the file missing a 50058 report Cause: The Authority failed to provide adequate monitoring and oversight to ensure compliance with HUD rules and regulations, as well as their Admissions and Continued Occupancy Policy. Effect: The Authority is not in compliance with federal regulations regarding eligibility. Auditor’s Recommendation: We recommend that management review their controls over recertifications and ensure compliance standards for eligibility of tenants and rent calculations are met. We also recommend management should designate one person to review a sample of the files that have been recertified each month. The purpose of the review is to determine if the tenant files were prepared in accordance with internal policies and verify the compliance deficiencies have been corrected. Grantee Response: Management agrees with the finding and will follow the Auditor's recommendations.

2024-004 ALN 14.850 – Public Housing Operating Fund – Special Tests and Provisions - Depository Agreements Condition and Criteria: Per HUD regulations and the Annual Contributions Contract (ACC), PHAs must execute and maintain a fully executed HUD Form 51999 with each depository in which federal funds are held. This agreement outlines the responsibilities of the financial institution and ensures that federal funds are protected in accordance with HUD requirements. In addition, these deposits in excess of $250,000 must be adequality collateralized at year end in order to be in compliance with HUD regulations. During our testing of special tests and provisions related to depository agreements for the Public Housing Operating Fund program, the Authority was unable to provide documentation of an executed HUD Form 51999 – General Depository Agreement – for one of its financial institutions during the audit period. This form is required to be on file to ensure compliance with HUD regulations governing the custody and handling of federal funds. The Authority's deposits in this institution were also under collateralized by $118,795 at year end. Amount of Questioned Costs: None. Context: During our testing of depository agreement compliance requirements, it was noted that the Authority was unable to provide evidence of a General Depository Agreement in place with Wells Fargo bank during the audit period. It was also noted that the Authority's deposits in this institution were under collateralized by $118,795 at year end. Cause: The absence of an executed agreement appears to be due to a lapse in internal control and recordkeeping procedures related to required HUD documentation. The shortfall in collateralization appears to be the result of internal control deficiencies related to monitoring activities. Effect: Without a properly executed HUD Form 51999, there is an increased risk that federal funds are not adequately protected or handled in accordance with HUD regulations. Without adequate collateralization of Federal funding, there is an increased custodial credit risk. It also represents noncompliance with special tests and provisions requirements under the Public Housing Operating Fund program. Auditor’s Recommendation: We recommend that the Authority strengthen its internal controls to ensure all required HUD depository agreements are fully executed and maintained on file for all institutions holding program funds. A periodic compliance review should be conducted to confirm that all depository agreements are current and properly executed, and that adequate collateralization of the Authority's deposits exists at year end. It should be noted that the Authority is in the process of executing a new depository agreement with this institution to be in compliance going forward. Grantee Response: Management acknowledges the finding and will follow the auditor’s recommendation.