Audit 390862

2024-002 – INTERNAL CONTROLS OVER COMPLIANCE – ALLOWABLE COSTS/COSTS PRINCIPLES Significant Deficiency/Other Noncompliance U.S. Department of Housing and Urban Development ALN #: 14.871 – Housing Voucher Cluster CRITERIA Factors affecting allowability of costs. 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. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non- Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this Part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. (g) Be adequately documented. (2 CFR Chapter 1 Part 200 § 200.403) CONDITION The Authority lacked controls over purchasing and payments to vendors. As such, we noted 2 instances where invoice was not properly allocated to Authority’s programs. CAUSE The Authority did not establish an effective control environment or effective control activities over financial reporting or compliance. EFFECT Expenses may have been inappropriately charged to the Housing Voucher Cluster. QUESTIONED COSTS None identified CONTEXT All expenditures of federal programs are subject to cost principles. REPEAT FINDING Not a repeat finding. RECOMMENDATION The Authority should implement proper controls in place to ensure invoices are allocated properly to appropriate programs.

2024-003 – REPORTING AND SPECIAL TESTS Significant Deficiency/Other Noncompliance U.S. Department of Housing and Urban Development CFDA #: 14.871 – Housing Voucher Cluster CRITERIA 24 CFR § 985 – The Section 8 Management Assessment Program (SEMAP) is designed to assess whether the Section 8 tenant-based assistance programs operate to help eligible families afford decent rental units at the correct subsidy cost. SEMAP also establishes a system for HUD to measure the Authority’s performance in key Section 8 program areas and to assign performance ratings. The method for selecting the Authority’s quality control sample must leave a clear audit trail that can be used to verify that the Authority’s quality control sample was drawn in an unbiased manner. CONDITION We noted that the SEMAP certification performed by the Authority was missing support for self-certifying indicators. As such, the Authority did not conduct its biennial SEMAP assessment correctly. CAUSE There was a turnover in Authority’s Executive Director during the year and the temporary Executive Director was not aware of SEMAP certification and reporting requirements. EFFECT The Authority is not in compliance with its SEMAP certification and reporting requirements. QUESTIONED COSTS None identified CONTEXT The Authority conducts the SEMAP assessment on a biennial basis. REPEAT FINDING Not a repeat finding. RECOMMENDATION The Authority should ensure that SEMAP assessment is conducted on a biennial basis and includes adequate supporting documentation. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.