2025-001 ALN 14.850 – Public Housing Operating Fund – Eligibility Condition and Criteria: In accordance with HUD eligibility compliance requirement, Uniform Guidance Single Audit compliance requires that for tenant eligibility, tenant files include certain information and documentation that is both accurate and complete such as to obtain and document third-party verification of annual income and other factors that affect the determination of adjusted income or income-based rent, and then properly calculate the rent payment using this documentation. Per 24 CFR sections 5.230, 5.609, & 982.516, tenants are required to provide necessary information, documentation, and releases for the Authority to verify income eligibility. During our audit, it was determined that internal control deficiencies over compliance existed over the Authority’s Public Housing Operating Fund program eligibility determination process. The Authority's staff had inadequate internal controls over the Authority’s Public Housing Operating Fund tenant eligibility process which has led to incomplete and inaccurate eligibility documentation. Of the eleven tenant files tested for eligibility compliance, six of these files did not have current EIV (Enterprise Income Verification) documentation, and nine of these files did not have a signed Declaration of 214 Status. Seven of the eleven tenant files tested lacked supporting documentation for income and eligibility determination. Amount of Questioned Costs: None Context: The Authority's staff had inadequate internal controls over the Authority’s Public Housing Operating Fund tenant eligibility process which has led to incomplete and inaccurate eligibility documentation. Of the eleven tenant files tested for eligibility compliance, six of these files did not have current EIV (Enterprise Income Verification) documentation, and nine of these files did not have a signed Declaration of 214 Status. Seven of the eleven tenant files tested lacked supporting documentation for income and eligibility determination. Cause: The Authority did not have proper quality control procedures in place over monitoring required documentation in tenant files. The Authority lacked a clear understanding of HUD Public Housing Operating Fund eligibility requirements relating to the EIV system and HUD documentation requirements. Effect or Potential Effect: The Authority is not in compliance with HUD requirements over documentation in tenant files. Auditor’s Recommendation: In general, we recommend that the Authority review documentation requirements regarding tenant files. The Authority should also begin performing quality control procedures including internal audits of tenant files to ensure that these files are accurate and complete. We also recommend that Authority staff obtain training through related training seminars and classes and to monitor HUD news and notices for any new guidance or changed to the public housing industry. Grantee Response: Management acknowledges the finding and will follow the auditor’s recommendation.
2025-002 ALN 14.850 – Public Housing Operating Fund – Allowable Costs – Bonus/Incentive Payments Condition and Criteria: Amounts reported as bonus/incentive disbursements were not included in the payroll system; therefore, they were not subjected to related federal, state, and local withholding taxes. Internal controls should be in place that require approvals for additions, deletions, and any periodic changes to payroll related amounts. Correct employee payroll information ensures that the proper amount of withholdings are submitted in accordance with IRS regulations. Amount of Questioned Costs: None Context: The Authority was unable to provide necessary documentation needed to verify amounts reported as bonus/incentive disbursements were not included in the payroll system; therefore, H&P was not able to determine if they were subjected to related federal, state, and local withholding taxes. Cause: The Authority’s internal controls lacked proper oversight to ensure policies and procedures over employee bonuses/incentives and payroll withholding amounts and/or payroll adjustments were being followed. As a result, incorrect amounts could be submitted to taxing agencies. Effect or Potential Effect: Fines and/or penalties may be imposed by taxing agencies if inaccurate amounts are withheld and submitted. Auditor’s Recommendation: Procedures should be implemented requiring Board of Commissioners approval for changes made to employee wages and the related withholding amounts to ensure amounts remitted to taxing agencies are correct. Grantee Response: Management acknowledges the finding and will follow the auditor’s recommendation.
2025-003 ALN 14.850 – Public Housing Operating Fund – Allowable Costs - Disbursements Condition and Criteria: In accordance with the cost principles under 2 CFR part 200, subpart E, cost must be necessary and reasonable for the performance of the Federal award, conform to any limitation or exclusions set forth in 2 CFR part 200, subpart E, and be adequately documented. During our audit, it was determined that internal control deficiencies over compliance existed related to the Authority’s Public Housing Operating Fund Program's allowable cost/cost principal’s compliance provisions. Identified control and compliance deviations included costs that were not adequately documented. During our audit, a lack of supporting documentation was observed for 19 out of the 23 check disbursements tested, including disbursements from the Public Housing Operating Fund Program. Further, it was observed in 19 out of the 23 check disbursements tested that the Authority was unable to locate copies of physical checks to ensure correct signatories are being used to endorse disbursements. Amount of Questioned Costs: None Context: During our audit, a lack of supporting documentation was observed for 19 out of the 23 check disbursements tested, including disbursements from the Public Housing Operating Fund Program. Further, it was observed in 19 out of the 23 check disbursements tested that the Authority was unable to locate copies of physical checks to ensure correct signatories are being used to endorse disbursements. During our audit, lack of supporting documentation was also observed for 2 out of the 2 checks tested for subsequent disbursements. Cause: The Authority's prior management's internal controls over the Public Housing Operating Fund Program's allowable costs/cost principal compliance provision that were in place were deficient. Staff who had the ability to make purchases and procure contracts did not adequately follow the cost principals included in 2 CFR part 200, subpart E, and therefore, the Authority did not have adequate support for check disbursements. Effect or Potential Effect: The Authority could incur costs that are unallowable and that are not necessary or reasonable. These internal control deficiencies could result in a possibility that errors or irregularities relating to cost can exist and not be detected by the Authority's internal controls. Auditor’s Recommendation: We recommend that the Authority's management take the necessary steps to ensure that all disbursements are sufficiently documented and supported by adequate backup. We also recommend that the Authority implement internal controls to detects when check disbursements do not have adequate support in accordance with 2 CFR part 200, subpart E. Grantee Response: Management acknowledges the finding and will follow the auditor’s recommendation.
2025-004 ALN 14.850 – Public Housing Operating Fund – Special Test - Depository Agreements Condition and Criteria: In accordance with the Annual Contributions Contract (ACC) and supporting HUD regulations like 24 CFR, part 990, Public Housing Authorities are required to maintain depository agreements (HUD-51999) with financial institutions that hold their funds. During our audit, it was determined that the Authority was unable to locate depository agreements with the two financial institutions that hold their funds. Amount of Questioned Costs: None Context: The Authority was unable to locate depository agreements with the two financial institutions that hold their funds. Cause: Due to recent personnel changes, the Authority's current management was unable to successfully locate Form HUD-51999 with the financial institutions that hold their funds. Effect or Potential Effect: Depository agreements include provisions ensuring that the deposited funds are secured or collateralized. The lack of depository agreements could result in improper collateralization of HUD funds. Auditor’s Recommendation: We recommend that the Authority's management take the necessary steps to obtain depository agreements from the two financial institutions that hold their funds. We also recommend that the Authority implement internal controls to detect when required HUD documentation is not present. Grantee Response: Management acknowledges the finding and will follow the auditor’s recommendation
2025-005 ALN 14.850 – Public Housing Operating Fund – Procurement and Suspension and Debarment Condition and Criteria: In accordance with 2 CFR part 215.40 through 215.48, all procurement transactions should be conducted in a manner in which to provide, to the maximum extent practical, open and free competition. It also states that some form of cost or price analysis shall be made and documented in the procurement files in connection with every procurement action. Lastly, in accordance with the Authority’s Procurement Policy, small purchase procedures for purchases or procurement of goods and services in excess of $10,000, or $2,00 for construction services, but not exceeding $250,000 requires documentation of all quotes that must be maintained in the procurement file. Also, in accordance with 2 CFR part 180, for covered transactions, non-Federal entities are required to verify that entities are not suspended, debarred, or otherwise excluded before contracting with the entities. During our audit, it was determined that internal control deficiencies over compliance existed related to the Authority’s compliance with the Public Housing Operating Fund program’s procurement and suspension and debarment compliance provisions. It was determined that these internal controls were likely ineffective as current management was unable to provide adequate files and supporting documentation to support procurement actions during the fiscal year ended June 30, 2025. Amount of Questioned Costs: None Context: The Authority was unable to provide adequate files and supporting documentation to support procurement actions during the fiscal year end June 30, 2025. Cause: As a result of the determination that the internal controls over procurement and suspension and debarment were likely to be ineffective, and due to the fact that the Authority waws unable to locate any procurement files for our audit, no tests of noncompliance were performed. Effect or Potential Effect: As a result of a lack of supporting documentation on file, the Authority may have procured goods and services that did not provide for open and free competition, or that were not reasonably priced which could have led to Federal funding waste. Also, the lack of evidence that the Authority obtained verification that awarded contractors were not suspended or debarred means that the Authority may have entered into covered transactions with contractors who were prohibited from contracting on projects using Federal awards, which opens up the Authority to the potential for contracting with a contractor who may have previously committed fraud, embezzlement, theft, etc., or that has a history of failing to perform. Auditor’s Recommendation: We recommend that the Authority review over all of their ongoing contracts and, for those contracts that are missing or expired, perform the necessary procurement actions and ensure that all procurement actions are adequately documented and maintained on file in accordance with the Authority’s Board-approved Procurement Policy. In addition, the Authority should ensure all those involved in the procurement process are provided adequate Public Housing procurement training. Grantee Response: Management acknowledges the finding and will follow the auditor’s recommendation.