Audit 406526

Reporting – Late Report Submissions to Federal Audit Clearinghouse and HUD Identification as a Repeat Finding: Not a repeat finding Federal Awards: 14.881 -HUD Moving to Work Demonstration; 14.195 - HUD Project Based Cluster; 21.027 - Coronavirus State and Local Fiscal Recovery FUnds. Finding: The Authority did not file its annual 2023 Single Audit and Data Collection Form timely with the Federal Audit Clearinghouse (FAC) and did not file its audited Financial Data Schedule timely with the U.S. Department of Housing and Urban Development (HUD). Sample Size and Population: Sampling was not applicable to this finding. Questioned Costs: None Criteria: As stated in 2 CFR 200.512(a)(1), the Uniform Guidance requires submission of the Single Audit Reporting Package and Data Collection Form to the FAC nine months after the fiscal year-end. As stated in 24 CFR 902.33(c), HUD requires public housing authorities to submit an audited Financial Data Schedule (FDS) through FASS-PH no later than 9 months after the fiscal year-end. As such, the Authority’s 2023 Single Audit and Data Collection Form submission to the FAC and the audited FDS submission to HUD were both due September 30, 2024. Condition: The FAC submission and the audited FDS submission were each filed more than 20 days after the due date. Cause: During 2023, the Authority underwent a major accounting and tenant management software conversion which resulted in delays in completing the Single Audit. Effect: • The Authority was non-compliant with Uniform Guidance and HUD reporting deadlines. • Late availability of audit information delayed Federal oversight and public transparency. Recommendations: Develop internal controls that provide for month-end and year-end accounting close milestone that include deadlines that will ensure external reporting deadlines are able to be met. Management Response: Management response is reported in the “Corrective Action Plan” at the end of this report. Contact Person: Lowel Krueger, Executive Director

Reporting – Incomplete Schedule of Expenditures of Federal Awards Identification as a Repeat Finding: Not a repeat finding Federal Awards: 21.027 - Coronavirus State and Local Fiscal REcovery Funds Finding: The Authority did not properly identify proceeds received under a pass-through loan program as including federal award funds under the U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds program, and therefore the loan was improperly excluded from the schedule of expenditures of federal awards (SEFA). Sample Size and Population: Sampling was not applicable to this finding. Questioned Costs: None Criteria: The Authority is required to report all federal awards expended during the audit period on the SEFA. For federal loan programs, federal awards expended include the value of new loans received during the audit period, and the SEFA notes must identify outstanding loan balances at the end of the audit period. 2 CFR § 200.502(a)(3), 2 CFR § 200.502(b)(1), and 2 CFR § 200.510(b)(5). Condition: The Authority’s originally issued 2024 SEFA omitted $2,477,915 of federal expenditures related to a pass-through loan from the Washington State Department of Commerce. The loan included federal funds from the U.S. Department of the Treasury’s Coronavirus State and Local Fiscal Recovery Funds program, Assistance Listing 21.027. The entire federal portion of the loan was drawn during the year ended December 31, 2024, and the outstanding balance of the federal portion of the loan was $2,477,915 at December 31, 2024 and $0 at December 31, 2023. The omission was identified after the original 2024 Single Audit report had been issued Cause: The Authority did not have an effective process to ensure that all departments communicated federal award and loan information to the finance department for SEFA reporting. Effect: The originally issued SEFA was materially understated by $2,477,915, and the SEFA notes omitted the $2,477,915 outstanding federal loan balance at December 31, 2024. The omission affected the major program determination because Assistance Listing 21.027 was not included in the original SEFA or original major program selection. As a result, the originally issued Single Audit reporting package did not include the revised SEFA amounts, did not identify ALN 21.027 as a major program, and did not include auditor testing and reporting over the ALN 21.027 major program. Recommendations: Management should implement procedures to ensure all grant agreements, loan agreements, pass-through award notices, and related amendments are reviewed by the finance department to determine whether they include federal funds. Management should also require communication between project management and finance personnel, perform a year-end reconciliation of loan draws and outstanding balances to the SEFA, and document review of the SEFA and related notes before issuance. Management Response: Management response is reported in the “Corrective Action Plan” at the end of this report. Contact Person: Lowel Krueger, Executive Director