Finding SA2021-002: Lack of Supporting Documentation for Expenditures AL number: 14.850 AL Title: Public and Indian Housing Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification number and year: CA010 (2021) Criteria: 2 CFR part 200, subpart E, costs charged to federal funds must be allowable, reasonable, and properly documented. Costs should be adequately supported to demonstrate they were necessary and directly related to the deferral programs. Condition: During our audit, we tested a sample of 60 transactions. Of these, 14 transactions with amount $151,619 lacked sufficient supporting documentation to verify the nature and allowability of the expenditures. Cause: We understand that the staff overseeing the federal awards during fiscal year 2021 are no longer with the Authority, and therefore, the staff overseeing the federal awards subsequent to the fiscal year were unable to provide supporting and documentation was not properly maintained, resulting in missing records to support certain expenditures. Effect: The Housing Authority may have charged unallowable costs to the Operating Fund, resulting in noncompliance with federal requirements. Questioned Costs: We question the costs in the amount of $151,619 noted above. Recommendation: The Housing Authority should develop and implement procedures to ensure that all required documentation related to public housing expenditures is properly maintained and supported. Staff responsible for approving and managing these records should be trained to ensure they understand and comply with applicable program requirements. Management Response: The Authority acknowledges this finding. Staff have implemented procedures requiring that all invoices, contracts, purchase orders, and supporting records be scanned and attached in MUNIS at the time of processing. A new review workflow ensures supervisory approval before expenditures are charged to federal funds. The Authority is conducting retroactive file recovery where possible and implementing staff training on documentation requirements under 2 CFR Part 200. These improvements will ensure expenditures are fully supported, allowable, and readily accessible for audit.
Finding SA2020-003: Operating Subsidy Payments Supporting Documentation AL number: 14.850 AL Title: Public and Indian Housing Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification number and year: CA010 (2021) Criteria: 24 CFR section 990 requires Public Housing Authorities (PHA) to provide operating subsidies to public housing projects and document the specific calculation requirements through HUD Form 52723. Condition: During our audit, we noted that operating subsidy payments totaling $582,050 were made to Easter Hill for Richmond Village I, II, and III during fiscal year 2021. While RHA provided the calendar year 2021 Form 52723, no Form 52723 for calendar year 2020 were available. As a result, we were unable to reconcile the subsidy payments and determine whether the subsidy amounts were properly calculated in accordance with the requirements of 24 CFR Part 990. Cause: We understand that the staff overseeing the federal awards during fiscal year 2021 are no longer with the Authority, and therefore, the staff overseeing the federal awards subsequent to the fiscal year were unable to provide supporting and documentation was not properly maintained, resulting in missing records to support certain expenditures. Effect: We were unable to determine whether the Housing Authority is in compliance with the calculation requirements of HUD Form 52723, as outlined in 24 CFR Section 990. Questioned Costs: We question the costs in the amount of $582,050 noted above. Identification as a repeat finding: Yes, since 2019. Recommendation: The Housing Authority should establish a procedure to appropriately reconcile the Form 52723 and subsidy payments ensuring that proper documentation is maintained and readily accessible for future audits. Management Response: The Authority agrees with the recommendation. The Authority will ensure that all operating subsidy requests are fully supported by the correct HUD Form 52723 documentation. Staff will develop a reconciliation process to confirm that subsidy payments align with HUD‑required calculations and that both current‑year and prior‑year forms are maintained for audit. The Authority will coordinate with property management partners to ensure supporting documentation is provided before subsidy drawdowns occur, and all records will be stored in accordance with HUD retention requirements.
Finding SA2021-004: Missing Tenant Documents AL number: 14.850 AL Title: Public and Indian Housing Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification number and year: CA010 (2021) Criteria: 24 CFR section 960 requires Public Housing Authorities (PHA) that receive public housing funds to remit payment to eligible tenants and to maintain documentation for the payments through a contract. Condition: We reviewed 51 tenant files for existing and new tenants for FY2021 and noted that the Authority did not maintain all required documentation. Furthermore, approximately 69% of the tenants are missing some required forms and documents, and 7 of the tenants have no related tenant personnel files and documents for FY2021. Cause: We understand that the staff overseeing the federal awards during fiscal year 2021 are no longer with the Authority, and therefore, the staff overseeing the federal awards subsequent to the fiscal year were unable to provide such documentation. Effect: The Housing Authority is not in compliance as stated in 24 CFR section 960. Identification as a repeat finding: Yes, since 2017. Recommendation: The Housing Authority must develop procedures to ensure that all required documentation for public housing tenants is properly maintained and readily accessible for future audits. Management Response: As part of ongoing efforts to strengthen file integrity and compliance standards, the Authority has implemented the following measures: • Standardized File Checklist: A comprehensive checklist has been developed and is included in all resident files. This tool is designed to ensure that all required documentation is accounted for and consistently organized. • Dedicated File Oversight Personnel: The Authority has hired designated staff responsible for the oversight, organization, and quality control of file documentation. These individuals will ensure ongoing compliance with HUD regulations and internal standards, as well as support audit readiness. • Income Certification Systemization: All income calculations for resident certifications are now completed and documented exclusively within the Property Management system, Yardi One. This centralizes data processing, improves accuracy, and ensures a reliable audit trail for all income determinations.
Finding SA2021-005: Lack of documentations for Declaration of Trust (DOT) and Declaration of Restrictive Covenants (DORC) AL number: 14.850 AL Title: Public and Indian Housing Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification number and year: CA010 (2021) Criteria: 24 CFR section 905 required non-federal entities including Public Housing Authorities (PHA) are required to maintain current or valid DOT or DORC recorded against all public housing properties that have received funding under the U.S. Housing Act of 1937. Condition: During our audit, we noted that the DOTs provided for certain housing properties are outdated and didn’t reflect subsequent modernization improvements. Cause: We understand that the staff overseeing the federal awards during fiscal year 2021 are no longer with the Authority, and therefore, the staff overseeing the federal awards subsequent to the fiscal year were unable to provide the supporting documents. Effect: The Housing Authority is not compliance with the HUD requirements as stated in 24 CFR section 905. Recommendation: The Housing Authority should maintain a list of all owned and insured properties, including land, non-residential facilities, and modernization efforts, and ensure that each property has a current and valid DOT/DORC on record. Management Response: The Authority maintains a comprehensive list of all owned and insured assets within our Asset Repositioning strategy document. In alignment with the recommendation, the Housing Authority will establish an electronic filing system to securely store all declarations of trust. In accordance with PHI Notice 2014-14, the Housing Authority will formally request the release of the Declaration of Trust (DOT) from HUD prior to the closing or transfer of the title of any public housing property.
Finding SA2021-006: CARES Act Funding FDS Reporting AL number: 14.850 AL Title: Public and Indian Housing Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification number and year: CA010 (2021) Criteria: In accordance with Notice PIH 2020-24, Public Housing Authorities (PHAs) that received CARES Act funding are required to include a separate reporting column in Financial Data Schedule (FDS) in its FASS-PH submission. Condition: During our review of unaudited FDS, we noted a separate column for CARES Act funding was not included as required by PIH Notice 2020-24. Cause: The staff was unaware that CARES Act funding need to report in a separate column in FDS. Effect: We were unable to verify the accuracy and completeness of the CARES Act expenditures reported in FDS. Recommendation: We recommend that Housing Authority implement a process to ensure that a separate column for CARES Act funding is included in the audited FDS submissions for FY2021 and future submissions in accordance with PIH Notice 2020-24. Management Response: The Authority acknowledges this finding. Staff were not aware of the requirement to use a separate FDS reporting column for CARES Act funds. Updated procedures now include mandatory review of HUD PIH Notices and reporting standards prior to annual submission. The Authority will ensure all future FASS‑PH filings include the required separate column for CARES Act expenditures, and staff assigned to FDS reporting will complete additional HUD training to avoid recurrence. Staff will implement CARES Act funding column during 2021 Audited FDS submission.
Finding SA2021-007: UEL Formula (Form 52722) – Utility Expense Reporting AL number: 14.850 AL Title: Public and Indian Housing Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification number and year: CA010 (2021) Criteria: Accounting to 24 CFR 990.170, the Utility Expense Level (UEL) is used to calculate the utility portion of the Operating Fund subsidy. Public Housing Authorities (PHAs) must retain utility consumption and costs data pursuant to 990.325 and report it on Form 52722. Condition: During our audit, we noted that the Authority filed Form 52722; however, the supporting documentation for utility consumption and cost data was not available, as the Authority was unable to retrieve the related backup records for review. Cause: We understand that the staff overseeing the federal awards during fiscal year 2021 are no longer with the Authority, and therefore, the staff overseeing the federal awards subsequent to the fiscal year were unable to provide the supporting documents. Effect: We were unable to verify the accuracy and completeness of the utility consumption and cost data reported to Form 52722. Recommendation: The Housing Authority should strengthen its internal control procedures to ensure that all utility invoices and supporting documentation are accurately retained, readily accessible in the future audit. Management Response: The Authority agrees with the finding. Procedures are being enhanced to ensure all utility invoices, consumption data, and related backup documentation are retained and filed systematically. Staff will maintain a complete utility expense folder for each fiscal year and ensure that Form 52722 submissions are fully supported. Training and periodic internal reviews will be established to verify compliance with 24 CFR 990.170 and 990.325.
Finding SA2021-001: Internal Control AL number: 14.850 and 14.872 AL Title: Public and Indian Housing, and Public Housing Capital Fund Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification number and year: CA010 (2021) Criteria: Public Housing Authorities (PHA) are required to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award as stated in CFR 200.303. Condition: During our audit, we were unable to obtain an understanding of the internal controls over the federal awards of the Authority, as current personnel could not respond to the processes and procedures. Cause: We understand that the staff overseeing the federal awards during fiscal year 2021 are no longer with the Authority, and therefore, the staff overseeing the federal awards subsequent to the fiscal year were unable to provide any information regarding the internal controls of the Authority. Effect: The Housing Authority is not in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award as stated in CFR 200.303. Identification as a repeat finding: Yes, since 2019. Recommendation: The Housing Authority must develop procedures to ensure that there is an internal control environment in compliance with the federal requirements. Management Response: The City has assigned staff to specific duties to support the Authority’s financial operations. Staff have implemented new processes that align with the City’s policies and procedures, while also in accordance with HUD regulations and requirements, to improve the integrity and accuracy of the Authority’s financial reporting and management of federal awards. The procedures ensure separation of duties and levels of approval to handle and manage federal funds. Staff also continue to attend trainings to understand Federal statutes and regulations.