Finding: 2025-004 MATERIAL WEAKNESS & NON-COMPLIANCE Allowable Costs/Cost Principles Community Services Block Grant AL #93.569 Community Services Block Grant Criteria: All costs charged to federal programs must be allowable and in accordance with the cost principles set forth in the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR Part 200, Subpart E, as well as the specific regulations of each federal program. Salary costs charged to a federal program must be supported by time records that accurately reflect the work performed Indirect costs allocated to the Community Services Block Grant (CSBG) program may not exceed the maximum allowable amount under the Agency’s negotiated indirect cost rate agreement. Condition: The Agency experienced turnover in the Finance Officer position at the end of February 2025. A CSBG financial technician assumed the role of Interim Finance Officer on March 1, 2025. From March 1 through June 30, 2025, the majority of the Interim Finance Officer’s salary was charged directly to the CSBG program. Timesheets for this period reflected eight hours per day spent working on CSBG activities and did not accurately reflect time spent on HUD programs or Management and Administrative (M&A) activities. In addition, the Agency charged the CSBG program indirect costs in excess of the allowable amount. Cause: These issues resulted from oversight and misunderstandings of program regulations and the cost principles outlined in the Uniform Guidance. Effect: The Agency charged unallowable costs to the CSBG program. Identification of a Repeat finding: This is not a repeat finding. Questioned Cost: $32,565 Recommendation: We recommend that management obtain training regarding allowable costs/cost principles set forth in the Uniform Guidance, 2 CFR Part 200, Subpart E, and applicable CSBG regulations. Management Response: Management agrees with this finding and recommendation.
Finding: 2025-006 SIGNIFICANT DEFICIENCY & NON-COMPLIANCE ELIGIBILITY AL # 14.871 Housing Choice Vouchers Criteria: Under HUD regulations, Public Housing Authorities (PHAs) must obtain and maintain documentation of tenant household income. Condition: For one tenant, documentation supporting a portion of a tenant’s household income could not be provided for review. Cause: The Agency transitioned from maintaining hard copy documentation to electronic records, and this portion of the documentation was not scanned. Effect: The tenant’s eligibility and the accuracy of the Housing Assistance Payment (HAP) could not be verified. Identification of a Repeat finding: This is not a repeat finding. Questioned Cost: None Recommendation: Management should ensure that all required documentation is obtained from the tenant and is available for review. Management Response: Management agrees with this finding and recommendation.
Finding: 2025-005 MATERIAL WEAKNESS & NON-COMPLIANCE Allowable Costs/Cost Principles, Activities Allowed or Unallowed AL # 14.871 Housing Choice Vouchers AL # 14.879 Mainstream Vouchers AL # 14.896 Family Self-Sufficiency Program AL # 93.569 Community Services Block Grant Criteria: Under the cost principles set forth in the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), 2 CFR Part 200, Subpart E, federal program costs must be necessary and reasonable for the performance of the federal award and allocable thereto. Costs must also conform to any limitations or exclusions set forth in these principles or in the federal award regarding type or amount. A transfer of funds from one program to another is generally unallowable, except in limited instances allowed by program regulations or with prior approval from the granting agency. Per HUD program regulations, with the exception of Moving to Work Housing Authorities, 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 (24 CFR §985.109). Such use may result in civil penalties or sanctions. Condition: Throughout fiscal year 2025, cash was transferred between various HUD programs, from HUD programs to the CSBG program, from the CSBG program to HUD programs, and between federal programs and the management and administrative function. These transfers were made to cover payroll, Housing Assistance payments, and other expenses. Cause: Cash shortages occurred at multiple points during the year. These were largely due to: • Portability Housing Assistance Payments made for over a year without reimbursement from the other Public Housing Authority • Inaccurate reporting of the HUD program’s equity in the Voucher Management System, • Uncertainty with HUD funding at the national level, and • Inadequate controls over the general ledger and financial reporting. Effect: Funds were transferred multiple times as noted above. Some transfers were below the $25,000 threshold for reporting questioned costs, and many were repaid within a month. However, $108,474 was transferred from the Housing Choice Vouchers program to the CSBG program in five payments between May 8, 2025, and June 10, 2025. Of this amount, $91,211 was repaid on August 28, 2025, and the remaining $17,263 was repaid on November 3, 2025. These transfers are violations of the cost principles of the Uniform Guidance and HUD regulations. Identification of a Repeat finding: This is not a repeat finding. Questioned Cost: $108,474 Recommendation: We recommend that management: • Contact HUD and CSBG to obtain retroactive approval for the transfers, if possible and allowable, and to determine the final amount required to be repaid, if any. • Require all upper-level management, including the Executive Director, Deputy Director, HUD Director, CSBG Director, and all finance staff, to obtain training on: o General federal program regulations, o HUD and CSBG-specific regulations, and o Financial reporting requirements. • Ensure financial reports are reviewed by upper-level management at least monthly. • Require all federal program reporting, particularly HUD reporting within the Voucher Management system, and CSBG reimbursement requests, to be reviewed by the respective program directors after preparation by the Finance Department. Management Response: Management agrees with this finding and recommendation.