Audit 406556

2025-003 Cash and Investment Account Balances Do Not Reconcile to the Financial Statements Criteria: Internal controls require that all cash accounts be reconciled monthly on a timely basis, with all reconciling items (outstanding checks, deposits in transit, bank errors, unrecorded transactions, etc.) properly identified, investigated, and recorded in the general ledger so that the reconciled balance agrees with the financial statements. Condition: During the audit of cash and investments as of Fiscal Year Ending September 30, 2025, we noted that the bank reconciliations for the accounts showed a total reconciled account balance of $1,911,869, while the Unaudited FDS balance reflected $2,373,781. The difference of $461,912 was not properly investigated, adjusted, or explained. Questioned Costs: $461,912 Effect: Misstatement of cash and investment balances in the financial statements, as well as an increased risk of undetected errors. Cause: Lack of prior management oversight. Recommendation: Perform an investigation and correction of the current reconciling differences and record the appropriate adjusting journal entries. The housing authority should also implement a monthly cash reconciliation process that ensures the final reconciled balance fully agrees with the general ledger.

2025-004 Improper Revenue Recognition Practices Criteria: Revenue recognition must be supported by adequate internal controls, proper documentation, and consistent application. Failure to comply can result in material misstatements of revenue, receivables, and related accounts. Condition: During the audit, we identified deficiencies in the housing authority's revenue recognition process. A sample of revenue transactions revealed that revenue was frequently recognized without sufficient support from the Capital Fund Program ($92,807.06), Low Rent program ($407,580.87), and Housing Choice Voucher program ($538,791.86). Questioned Costs: $1,039,179.79 Effect: Overstatement of revenue in the audit period and corresponding misstatement of earning, assets, and liabilities. Cause: Inadequate review controls in the revenue cycle. Recommendation: We recommend that the Housing Authority maintain complete files with evidence of revenue transactions.

2025-005 Missing Documentation Criteria: Requested information should be readily available for audit examination. Accurate record keeping and reporting are crucial to the successful management of funded activities. Condition: The Authority was unable to provide a majority of the supporting documentation. This includes but is not limited to the following significant areas: • invoices • tenant files • operating budget The Authority was unable to produce the requested documents supporting Housing Authority financial statements. Questioned Cost: Cannot be determined, due to incomplete information. Effect: Housing Authority’s financial statements are not supported. Cause: Lack of prior management oversight. Recommendation: We recommend the Housing Authority’s management implement a system to maintain source documents and files that support the financial transactions.

2025-006 Delinquent Payments in Lieu of Taxes Criteria: Per 24 CFR 990.190 and Section 6(d) of the United States Housing Act of 1937, Public Housing Authorities are required to make Payments in Lieu of Taxes (PILOT) to the local governing body. PILOT is generally calculated as 10% of shelter rents (net tenant rental revenue less utilities) or a lesser amount as prescribed by state law, local agreement, or due to non-performance by the local body. PHAs must pay or properly accrue these obligations in a timely manner and maintain supporting documentation. Condition: During the audit period, the housing authority had not paid PILOT for two years. As of the fiscal year end, the Housing Authority owed approximately $67,748 in unpaid PILOT. No waiver or agreement reducing/eliminating the PILOT obligation was obtained from the local governing body. Questioned Costs: $67,748 Effect: Noncompliance with HUD regulations and the local cooperation agreement. Cause: Prior management did not prioritize the payments and did not pursue a formal waiver where potentially available. Recommendation: Immediately pay all outstanding PILOT amounts or obtain a formal written waiver from the appropriate local governing body.