Audit 377480

Finding 2025-005: Voucher Management System Reporting Housing Choice Voucher (14.871) and Mainstream Voucher (14.879) Material Weakness/Noncompliance Criteria: The Agency is required to transmit monthly information in the Voucher Management System that is supported by the Agency’s underlying leasing and accounting records. Condition: During our review of the Voucher Management System (VMS) for fiscal year 2025, we noted the following information reported within the VMS system did not agree with amounts recorded in the general ledger for both the Housing Choice Voucher program (CFDA 14.871) and the Mainstream Voucher program (CFDA 14.879): • Housing Choice Voucher (14.871) o Net restricted position on VMS was overstated by $21,210. o Unrestricted net position on VMS was understated by $12,016. o Housing assistance payments in VMS were understated by $2,598. • Mainstream Voucher (14.879) o Net restricted position on VMS was understated by $139. o Unrestricted net position on VMS was overstated by $10,242. Cause: The Agency did not have a system in place to accurately reconcile the information used to prepare the information used for the VMS submissions to the underlying accounting records. Effect: Failure to reconcile VMS data to underlying financial records can result in: • Inaccurate reporting to HUD, which impairs HUD’s oversight of program funding and compliance. • Potential misallocation of federal funds and unsupported program balances in your audited financial statements. Recommendation: We recommend that the Housing Agency develop and formalize a written reconciliation procedure that aligns VMS balances with the general ledger at least monthly, documenting all adjustments. Further, the Housing Agency should implement review controls whereby a staff member independent of the VMS data entry process validates the net restricted and unrestricted positions before submission. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.

Finding 2025-006: HUD Depository Agreements Housing Choice Voucher Cluster, 14.871 and 14.879 Material Weakness/Noncompliance – Special Tests and Provisions Repeat Finding 2024-002 Criteria: The Agency is required to enter into depository agreements with its financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third-party rights to HUD. That agreement states: Any portion of HA Funds not insured by a Federal insurance organization shall be fully (100%) and continuously collateralized with specific and identifiable U.S. Government or Agency securities prescribed by HUD in a notice. Collateralization is required on a daily basis at the end of the business day. Such securities shall be pledged and set aside in accordance with applicable law or Federal regulations. The HA shall have possession of the securities (or the HA will take possession of the securities) or an independent custodian (or an independent third party) holds the securities on behalf of the HA as a bailee (evidenced by safe keeping receipt and a written bailment for hire contract) and will be maintained for the full term of deposit. Condition: The Agency did have depository agreements with its banks but they were not the most recent version of the form. Further, the Agency’s Mainstream Voucher bank account was not listed on the depository agreement the Agency did have. We further noted the Agency was not monitoring the collateral pledged to cover the deposits and did not have information to support the pledges as of March 31, 2025. Cause: The Agency was not monitoring to ensure it had the most recent version of the form and to ensure all accounts were included and did not take action to correct the prior year finding. Effect or Potential Effect: The Agency was in noncompliance with HUD’s requirement to have proper depository agreements. Recommendation: The Agency should contact its financial institutions and review the depository agreement and follow the terms which includes proper collateralization. The Agency should monitor to ensure the securities pledged are adequate to cover the Agency’s deposits at the bank. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.