Audit 393156

Finding 2025-004: Allowable Activities Housing Choice Voucher – 14.871 Material Weakness/Noncompliance – Activities Allowed or Unallowed Criteria: In the Housing Choice Voucher program, accumulated administrative fees post fiscal year 2003 may only be used to support the Housing Choice Voucher program. Further, the transfers of HAP and associated administrative fees, even temporarily, to support another program or use are not allowed and could be considered a breach of the annual contributions contract. Condition: The Agency utilizes the Voucher program to pay expenses on behalf of both the Voucher and Management programs. All payments are allocated between the Housing Choice Voucher program and the Management program. The Management program had a decrease in its unrestricted net position of $6,211 during the fiscal year ending September 30, 2025 which left a deficit balance of $4,215. The Management program owed the Voucher program $5,537 at September 30, 2025 and no longer had enough funds to pay all of its liabilities. The interfund balance was not being reimbursed in full every month. Cause: The Agency was not adequately monitoring its financial condition. Effect or Potential Effect: The Housing Choice Voucher program funded the Management programs losses and related deficit. Further, the process of the Voucher program paying bills on behalf of the Management program creates a temporary loan which is not allowable. Recommendation: The Agency should review with HUD on how to handle this issue. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.

Finding 2025-005: HOTMA Housing Choice Voucher – 14.871 Material Weakness/Noncompliance – Eligibility Criteria: The Housing Opportunity Through Modernization Act of 2016 (HOTMA), as implemented through HUD regulations and guidance, required public housing agencies administering the Housing Choice Voucher (HCV) program to adopt and implement certain HOTMA provisions no later than July 1, 2025. Public housing agencies are responsible for ensuring program policies, procedures, and operations are updated timely to comply with HUD requirements. Condition: The Housing Authority did not implement the required HOTMA provisions applicable to the Housing Choice Voucher program by the required effective date of July 1, 2025. Implementation of the HOTMA requirements was not completed until September 2025. As a result, the Authority administered the Housing Choice Voucher program for approximately two months without full compliance with HUD’s HOTMA implementation requirements. Cause: The Authority did not have adequate internal controls in place to ensure timely adoption and implementation of new HUD regulatory requirements. Specifically, management did not complete the necessary updates to program policies and procedures prior to the required implementation date. Effect or Potential Effect: Failure to timely implement HOTMA requirements increases the risk that the Housing Choice Voucher program was not administered in full compliance with HUD regulations during the period from July 1, 2025 through September 2025. It should be noted we noted no instance of noncompliance as a result of this failure during our testing. Recommendation: We recommend that the Housing Authority continue to monitor HUD regulatory updates and establish procedures to ensure timely adoption and implementation of future program requirements. Management should also ensure that updated policies and procedures are reviewed and approved prior to required effective dates to maintain compliance with HUD and Uniform Guidance requirements. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.