Audit 413313

2025-002 Eligibility Housing Voucher Cluster Significant Deficiency in Internal Control Other Matter to be Reported Under the Uniform Guidance Condition: Out of an approximate population of 3,800 tenants, a total of 40 tenant files were selected for testing and the following deficiencies were noted: • Four files contained an incorrect utility allowance • One file contained an incorrect payment standard • One file was missing an adult member of the household’s signature on the 9886 form 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 complete and accurate tenant files. Context: The auditor haphazardly selected 40 tenant files out of the population, which is considered to be a statistically valid sample. 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. Cause: The Authority determined the cause for each error is as follows: • Incorrect utility allowance – Resulted from manual calculation of utility allowance for 6-bedroom unit. The Authority’s software limits bedroom size to 5 bedrooms. Staff did not properly adjust utility allowances against changes to the voucher size. • Incorrect payment standard – Year over year decreases to payment standard led to a manual override of the correctly used system generated payment standard resulting in the incorrect payment being applied. • Missing 9886 form – The Authority’s data system contributed to the 9886 form not being signed by an adult household member as the system does not notify staff when a minor turns 18 after the time of recertification. Effect: The Authority is not in full compliance with HUD requirements regarding eligibility which could result in the incorrect amount of rental assistance provided. Questioned Costs: None, HAP amounts were not impacted by these noted items. Auditor Recommendations: The Authority should continue to train staff on the established procedures and controls in place to ensure full compliance in regard to eligibility. 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.

2025-003 Eligibility Public Housing Operating Fund, AL No. 14.850 Significant Deficiency in Internal Control Other Matter to be Reported Under the Uniform Guidance Condition: Out of an approximate population of 980 tenants, a total of 40 tenant files were selected for testing and the following deficiencies were noted: • Two files contained an incorrect utility allowance • Two files did not have inspections performed during the required time period • One file contained income calculation errors • One file was missing a 214 form for a member of the household • One file was recertified late (one month overdue) Criteria: The Authority’s ACOP and 24 CFR 960.259 requires internal controls to be in place to ensure proper procedures are being followed in compliance with HUD requirements regarding complete and accurate tenant files. Context: The auditor haphazardly selected 40 tenant files out of the population, which is considered to be a statistically valid sample. 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. Cause: The deficiencies are a result of employee errors, failure to properly review work for accuracy, and lack of site management review and oversight. Effect: The Authority is not in full compliance with HUD requirements regarding eligibility which could result in the incorrect amount of rental assistance provided. Questioned Costs: None, operating subsidy amounts were not impacted by these noted items. Auditor Recommendations: The Authority should continue to train staff on the established procedures and controls in place to ensure full compliance in regard to eligibility. 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.

2025-001 Unsupported Capital Fund Accounts Receivable and Related Excess Federal Cash Drawdown Public Housing Capital Fund Program, ALN 14.872 Significant Deficiency in Internal Controls Other Matter to be Reported Under the Uniform Guidance Condition: During the testing of Capital Fund Program drawdowns, the auditor identified two drawdowns for costs that had not been paid. The first drawdown related to revenue recorded with a due from HUD balance in the prior year. The Authority drew down the funds to make a payment to reduce the net pension liability, but the payment was never made. The second drawdown was due to the Authority receiving a duplicate invoice that had not been paid; the funds were drawn down before the invoice was identified as a duplicate. As a result, the Capital Funds held in the Authority’s bank accounts were not eligible for payment and are due back to HUD. The unsupported prior year due from HUD amount also resulted in a correction of error in the current-year financial statements. Context: The auditor haphazardly selected 19 drawdowns, representing approximately 70% of total Capital Fund drawdowns, from the population, which we consider to be a statistically valid sample size. The auditor reviewed the drawdowns and supporting documentation to ensure proper procedures are being followed and that the Authority is in compliance with HUD requirements. Criteria: Per 2 CFR 200.302(b)(6), the Authority is required to maintain financial management systems and written procedures that minimize the time between receipt of federal funds and disbursement for program purposes. Advance draws must be limited to the minimum amounts needed and timed to the Authority’s actual, immediate cash requirements. HUD regulations require the Authority maintain complete records of Capital Fund Program obligations and expenditures per 24 CFR 905.326. Cause: The Authority’s controls were not effective to prevent or detect the missed payment. The process for drawdown funds prior to payment did not allow for the controls to detect the duplicate invoice until the packet moved to the accounts payable process. Effect: The Authority recorded an unsupported Capital Fund accounts receivable and drew federal funds for costs that had not been paid. A material correction of error was recorded in the current year financial statements, and the Authority owes the related funds back to HUD. Questioned Costs: $0, the Authority did not misspend any funds related to these identified issues. The excessive draws totaled $293,151, representing the Capital Fund amounts drawn for the unpaid prior year accounts receivable balance and duplicate invoice. The Authority is required to return these funds and any interest earned on them to HUD. Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over grant drawdowns and financial reporting to ensure reporting will be accurate and timely and that variances between expected and actual outcomes are investigated.