Audit 412143

Finding 2025-001 – Cash Disbursements and Procurement Material Weakness Condition and Context: Sound, adequate internal controls as well as HUD rules and regulations require adequate accounting and record keeping for all expenditures. During review of disbursements, nine paid invoices could not be located (including one credit card statement with supporting documentation). Criteria: 2 CFR § 200.302 requires records supporting Federal expenditures to be supported by source documentation, and 2 CFR § 200.334 requires financial records and supporting documentation related to Federal awards to be retained for the applicable retention period. Cause: The Authority did not have effective procedures to ensure that complete supporting documentation was retained and readily retrievable after disbursements were processed. Effect: Without adequate supporting documentation, the Authority cannot demonstrate that the expenditures were valid, properly authorized, accurately classified, incurred for an appropriate purposes, or allowable under applicable funding requirements. Because the deficiency affects the Authority’s ability to substantiate recorded expenditures and could allow material errors, unauthorized expenditures, or misappropriation of assets to occur without timely prevention or detection, we consider this deficiency to be a material weakness in internal control over financial reporting. Questioned Cost: Total unsupported disbursements were $64,621. Recommendation: We recommend the Authority implement required documented review and approval by an individual independent of payment preparation, maintain supporting documentation in a centralized electronic records system with routine backups, periodically review disbursement files to verify that documentation is complete and retrievable, contact the applicable vendors and attempt to obtain replacement documentation for the unsupported transactions identified during the audit, and evaluate whether any expenditures that remain unsupported should be repaid to the applicable program.

Finding 2025-002 – Tenant Eligibility and Reexaminations Subject: Section 8 Housing Choice Voucher Program – Tenant Eligibility and Reexaminations Federal Agency: Department of Housing and Urban Development Federal Program: Section 8 Housing Choice Vouchers Assistance Listing Number: 14.871 Federal Award Number and Year (or Other Identifying Number): CY 2025 Pass-Through Entity: Not applicable Compliance Requirement: Eligibility Audit Finding: Material Weakness Condition and Context: During audit fieldwork, tenant files were reviewed for compliance with Program eligibility and reexamination requirements. It was noted the Housing Authority does not perform a second party review on annual rent certifications resulting in miscalculation of tenant rent and housing assistance payments for 7 program participants. Additionally, incorrect utility allowances were used for 28 project-based voucher participants which was newly administered by the PHA commencing July 2025. Rent miscalculations resulted from incorrect calculations of wages or income, adjusted income, and the application of incorrect utility allowances. Criteria: 24 CFR § 982.516(a)(2) states in part “Except as provided in paragraph (a)(3) of this section, the PHA must obtain and document in the tenant file third-party verification of the following factors, or must document in the tenant file why third-party verification was not available: (i) Reported family annual income; (ii) The value of assets; (iii) Expenses related to deductions from annual income; and (iv) Other factors that affect the determination of adjusted income.” Cause: The Authority did not design and implement an effective supervisory or quality control review process over annual reexaminations and new admissions. Reexamination calculations were placed into effect without an independent review of the underlying income information, deductions, utility allowances, tenant rent, and housing assistance payment calculations. Effect: The Authority made incorrect housing assistance payments and assessed incorrect tenant rents. These errors may result in Federal funds being used for costs that are not allowable under program requirements and may require the Authority to reimburse affected families, landlords, or the HCV program.Questioned Cost: Known questioned costs totaled $14,604, representing housing assistance payment overpayments identified in the seven tenant files during the fiscal year. Recommendation: We recommend the Housing Authority implement and execute strengthened controls over the federal Eligibility compliance requirement to include the performance of annual reexaminations and documentation maintenance; the above discrepancies need to be addressed, and all tenant files should be reviewed for compliance.