Audit 406074

2025-002 Payroll Significant Deficiency in Internal Control (Repeated from prior year, Finding No. 2024-002) Condition: During our audit of payroll expenditures, the Authority was unable to provide adequate supporting documentation and as a result we were unable to verify that employees were paid at the properly approved rates for the periods tested and that internal controls were operating effectively. Context: The auditor haphazardly selected thirteen employees from the employee listing for the year ended September 30, 2025, in order to test five different pay periods during the fiscal year, which we consider to be a statistically valid sample size. The auditor requested the personnel and human resources documentation to ensure that proper procedures are being followed and that the Authority is in compliance with HUD requirements regarding complete and accurate payroll files. Management was unable to provide sufficient documentation to support the pay rates being used in processing for six of the selected employees. Criteria: The Authority is required to maintain records that adequately support the compliance and allowability of expenditures charged to HUD-funded programs. In addition, HUD financial management and internal control requirements require management to establish and maintain internal controls that ensure payroll costs are properly authorized, documented, and supported. Adequate personnel files should include documentation supporting approved compensation, including initial salary approvals and subsequent changes. Cause: The Authority changed providers for its payroll processing at the end of the fiscal year, and the former provider was not able to provide adequate audit support for timecards. In addition, the Authority experienced a change in Human Resources personnel during the fiscal year, and staff were not able to locate support for all wages during the fiscal year ended September 30, 2025. Effect: Due to the lack of documentation, processes and internal controls, the Authority is unable to properly monitor their payroll process to ensure accurate wages were disbursed to employees. Questioned Costs: $82,424. Auditor’s Recommendations: The Authority should implement internal controls over payroll and human resources to ensure complete and accurate personnel files are maintained on an ongoing basis for all employees. The Authority should review all current employee payroll files to ensure their files are up to date and include documentation supporting their approved pay rates and all subsequent compensation changes. Management Response: See Corrective Action Plan.

2025-003 Procurement Material Weakness in Internal Control (Repeated in part from prior year, Finding No. 2024-003) Condition: For two of the four contracts tested, the contracts were not solicited in accordance with the Authority’s procurement policy. The contracts did not go through a formal solicitation process, and instead three informal bids were received. Additionally, none of the contracts tested contained quality control documentation to support internal controls. Context: The auditor haphazardly selected four contract files out of the population of thirteen contracts procured during the year ended September 30, 2025, which we consider to be a statistically valid sample. As part of our audit procedures, we reviewed procurement files to assess areas of compliance with HUD requirements and the effectiveness of internal controls over procurement activities. Criteria: The Authority’s procurement policy, HUD rules and regulations, and 2 CFR 200.318 require that certain procedures be performed in the procurement of vendors to ensure that fair and open competition results in services of the best possible value to the Authority, and that sufficient documentation be maintained to support the procurement method selected for the contract award process. Cause: The Authority experienced staffing and operational changes during and subsequent to the year ended September 30, 2025. Due to staffing changes and ineffective controls over the procurement process, the Authority was unable to ensure procurement requirements were consistently followed and that proper documentation was retained. Effect: As a result of the lack of adequate procurement documentation, the Authority is unable to demonstrate that contracts were awarded in compliance with the Authority’s and HUD’s procurement requirements. Questioned Costs: $141,395. Auditor’s Recommendations: The Authority should strengthen their internal controls over procurement by implementing standardized procurement procedures, including documentation checklists and supervisory review processes to ensure compliance with procurement requirements. The Authority should also provide training to staff involved in the process to ensure they are aware of the requirements and processes. Management Response: See Corrective Action Plan.

2025-004 Eligibility Housing Voucher Cluster Material Weakness in Internal Control Other matter required to be reported in accordance with Uniform Guidance (Repeated in part from prior year, Finding No. 2024-004) Condition: Out of a population of 377 Housing Voucher Cluster tenants, we selected 40 tenants for testing and the following deficiencies were noted: • 6 files had incorrect income calculations, 5 of which impacted the HAP received; • 2 files were missing signatures on their 9886 form; • 2 files were missing 214 declarations for members of the household; • 1 file was missing identification for adults and dependents in the household; • 1 file had the incorrect utility allowance applied; • 1 file was delayed in receiving an annual recertification (13-month recertification); and, • 1 file did not have an annual recertification performed when due, and not able to be provided for testing. Context: The auditor haphazardly selected 40 tenants which we consider to be a statistically valid sample size. The auditor reviewed the tenant files and support to ensure that proper procedures are being followed and that the Authority is in compliance with HUD requirements regarding timely, complete, and accurate tenant files. Criteria: The Authority’s Administrative Plan and 24 CFR 982.516 requires internal controls to be in place to ensure proper procedures are being followed in compliance with HUD requirements regarding timely, complete, and accurate tenant files. Cause: The Authority experienced staffing and operational challenges and did not have the available staff to follow the established internal controls to ensure proper compliance with regards to timely recertifications and collection of required HUD documentation to verify eligibility and calculate accurate housing assistance payments. Effect: The Authority is not in compliance with HUD requirements regarding eligibility which could result in the incorrect amount of rental assistance provided. Questioned Costs: $64,324. Auditor Recommendations: The Authority should reevaluate their established procedures and controls in place to ensure full compliance in regards to eligibility and the timeliness of recertifications. The Authority needs to correct the deficiencies noted in the tested files and consider the impact to the rest of the population of tenant files that were not selected as part of the auditor’s sample. Management Response: See Corrective Action Plan.

2025-005 Allowability - Interprogram Activity Public Housing Operating Fund ALN 14.850 (non-major program) Significant Deficiency in Internal Control Other matter required to be reported in accordance with Uniform Guidance Condition: The Authority maintains a material interprogram receivable balance in the asset management program (“AMP”), which is due from other programs of the Authority. This interprogram receivable increased by $373,091 from the September 30, 2024 balance of $433,981, for a total receivable balance of $807,072 as of September 30, 2025. Context: The auditor reviewed the interprogram activity for the current year and noted that the Authority continued to fund other programs of the Authority with restricted public housing operating funds. Criteria: Per 2 CFR 200.403 and the line definition guide issued by HUD for the Financial Data Schedule, funds in the AMP can only be transferred to other programs of the Authority for pre-approved HUD exceptions. The Authority is cautioned that funds are normally not fungible between different federal programs regardless of the nature of the transfer or receivable. Inappropriate use of funds, even a temporary loan, are considered ineligible costs resulting in noncompliance. Cause: The Authority experienced staff turnover in the finance department as well as difficulty replacing personnel that were knowledgeable with HUD and grant allowability requirements. Effect: The Authority is not in compliance with HUD requirements regarding eligible and allowable use of federal funds. Questioned Costs: $807,072. Auditor Recommendations: We recommend that the Authority immediately discontinue using Public Housing Operating Fund resources to fund costs or cash shortfalls of other programs or component units. The Authority should prepare a detailed reconciliation of all interprogram receivable and payable balances by program and implement a repayment plan to restore the Public Housing Operating Fund. We further recommend that the Authority implement written cash management and interprogram accounting procedures to prevent future unauthorized advances. These procedures should include monthly reconciliation of all interprogram balances, supervisory review, and approval of interprogram activity. Management Response: See Corrective Action Plan.