Finding 2025-002 Finding 2025-002 is also a federal award finding and is required to be reported in accordance with the Uniform Guidance and State of New Jersey OMB Circular 15-08. Criteria: The Authority should maintain effective internal controls over payroll to ensure compensation paid to employees is properly authorized, accurately calculated, supported by appropriate documentation, and consistent with Board-approved salary schedules. Any deviations from approved compensation amounts should be formally approved and adequately documented. Condition: The Authority employs nine (9) employees. During detailed testing of one (1) employee selected from the payroll population, we noted that the compensation paid per payroll reports did not agree to the salary amount reflected in the Board-approved salary guide. Management was unable to provide supporting documentation or an explanation for the variance between the approved salary and the amount paid. Known Questioned Costs: Amount is below threshold of $25,000. Cause: The Authority lacked adequate controls to ensure that employee compensation is reviewed and reconciled to Board-authorized salary schedules. In addition, documentation supporting changes in compensation or deviations from approved salary amounts was not maintained in a manner sufficient to demonstrate proper authorization. Effect: Without adequate review and documentation of compensation amounts, there is an increased risk that payroll expenditures may be inaccurate, unauthorized, or inconsistent with Board-approved compensation levels, and that errors or irregularities may not be identified and corrected in a timely manner. Recommendation: We recommend that the Authority implement procedures to ensure employee compensation is periodically reconciled to Board-approved salary authorizations. Any changes to employee compensation should be formally approved, adequately documented, and maintained in personnel files. Management should also perform and document periodic supervisory reviews of payroll reports to verify that compensation paid agrees to authorized salary amounts.
Finding 2025-004 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Project-Based Cluster - Project Based Rental Assistance Federal Assistance Listing Numbers: 14.195 Noncompliance - E. Eligibility - Tenant Files Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance for Eligibility Criteria: Tenant Files. The PHA must do the following: As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility (24 CFR section 5.233). These files are required to be maintained and available for examination at the time of audit. Condition: Based upon inspection of the Authority’s files and on discussion with management, there were documents that were unavailable for examination at the time of audit. Context: There are approximately one hundred eighty eight (188) Project Based Rental Assistance units. Of a sample size of twelve (12) tenant files, five (5) tenants' HUD-50059 forms included income that was unsupported or included income that was miscalculated during their annual reexamination. Our sample size is statistically valid. Known Questioned Costs: Amount is below threshold of $25,000. Cause: There is a material weakness in internal controls over the compliance for the eligibility type of compliance related to the maintenance of tenant files. The Authority has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance. Effect: The Project Based Rental Assistance program is in material non-compliance with the eligibility type of compliance related to the maintenance of tenant files. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement.
Finding 2025-005 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Project-Based Cluster - Project Based Rental Assistance Federal Assistance Listing Numbers: 14.195 Noncompliance - N. Special Tests and Provisions - Housing Quality Standards Non Compliance Material to the Financial Statements: Yes Material Weakness in Internal Control over Compliance for Special Tests and Provisions Criteria: Housing Quality Standards. The PHA must provide housing that is decent, safe, and sanitary. To achieve this end, the PHA must perform housing quality inspections at the time of initial occupancy and at lease annually thereafter to ensure that the units are decent, safe, and sanitary (24 CFR section 574.310(b)(1)-(2)). Condition: Based upon inspection of the Authority’s files and on discussion with management, there were units that were not inspected within the annual inspection period. Context: There are approximately one hundred eighty eight (188) Project Based Rental Assistance units. Of a sample size of twelve (12) tenant files, nine (9) annual inspections were not completed in a timely manner. Our sample size is statistically valid. Known Questioned Costs: $33,381 Cause: There is a material weakness in internal controls for the Project Based Rental Assistance program over the compliance for the special tests and provisions type of compliance related to housing quality standards. The Authority has not properly performed annual inspections in compliance with program requirements. Effect: The Project Based Rental Assistance program is in material non-compliance with the special tests and provisions type of compliance related to housing quality standards. Recommendation: We recommend the Authority design and implement internal control procedures that will reasonably assure compliance with the Uniform Guidance and the compliance supplement.
Finding 2025-006 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Titles: Section 8 Project-Based Cluster - Project Based Rental Assistance Federal Assistance Listing Numbers: 14.195 Noncompliance - N. Special Tests and Provisions - Tenant Utility Allowances Non Compliance Material to the Financial Statements: No Significant Deficiency in Internal Control over Compliance for Special Tests and Provisions Criteria: Tenant Utility Allowances. The PHA must perform an annual review of tenant utility allowances to determine their reasonableness and adjust utility allowances, when appropriate, based on changes in utility rates and other factors affecting utility consumption (24 CFR sections 5.603, 880.610, 881.601, 882.510, 882.808(k), 883.701, 884.220, 886.126, 891.440 and 886.326). Condition: The Authority did not perform or document an annual review of tenant utility allowances during the audit period. Management was unable to provide evidence that utility allowances were evaluated for reasonableness, updated utility rate information was considered, or that a determination was made regarding whether adjustments to utility allowances were necessary. Known Questioned Costs: Unknown Cause: The Authority lacked procedures to ensure that annual utility allowance reviews were performed and documented in accordance with HUD requirements. Management was not aware of and did not adequately monitor the requirement to perform and retain documentation supporting the annual review process. Effect: Failure to perform and document annual utility allowance reviews may result in utility allowances that do not accurately reflect current utility costs. As a result, tenant rent calculations may be incorrect, increasing the risk of noncompliance with HUD requirements and potential inaccuracies in housing assistance calculations. Recommendation: We recommend that the Authority establish and implement procedures to perform and document annual reviews of tenant utility allowances. The review should consider current utility rates and other factors affecting utility consumption and should include documentation supporting management's determination of whether utility allowance adjustments are necessary. Documentation should be retained to demonstrate compliance with HUD requirements.