2025 – 001: Period of Performance Federal Program CFDA # 14.872 Capital Fund Program Type of Finding: Material Weakness in Internal Control over Compliance Condition: Management of a financial reporting entity is required to establish and maintain internal controls over compliance to ensure that they are compliant with all requirements of Federal programs. The Authority did not obligate sufficient amounts of expenditures within the allotted time frame for one capital fund program out of five programs tested. Criteria or specific requirement: Unless an extension is approved by HUD, a PHA must obligate at least 90 percent of each Capital Fund grant, including formula grants, non-accumulating RHF, natural disaster, and lead-based paint grants within 24 months of the funds becoming available to the PHA for obligation. Effect: In one instance out of five capital fund programs tested the PHA did not obligate 90% of the capital funds within the period of performance. Cause: There were miscommunications and misunderstanding between HUD and the PHA regarding the requirements for extending deadlines and obligations related to COVID-19 consequences, including impacts on supply chains and staffing capacity. Additionally, there was confusion concerning the applicable guidelines for small, rural, high-performing PHAs. This misunderstanding affected the interpretation and implementation of certain requirements and timelines. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended the Authority review all of the policies in place relating to the obligation of capital programs to ensure that funding is properly obligated and expended within the required time frame. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding.