Corrective Action Plans

Finding 2022-002 Federal Award Finding Name of Official Responsible for Corrective Action: Earl Richardson, First AME Housing Association Interim Executive Director Corrective Action Planned: Reviewing the audit report, we acknowledge discrepancies in our income calculation and verification processes. We understand the critical importance of accurate income assessments in determining HUD HAP eligibility and share your commitment to maintaining the program's integrity. To rectify the identified issues, we have initiated the following corrective actions. 1. Review and Update Procedures: We have thoroughly reviewed our existing income calculation and verification procedures. Based on this review, we are revising and updating our procedures to ensure compliance with HUD regulations and guidelines. 2. Staff Training: Recognizing the importance of well-trained staff in accurately executing income verification processes, we are implementing a comprehensive training program. This program will cover HUD guidelines, income calculation methods, and verification protocols to enhance the skills of our staff involved in the eligibility determination process. 3. Internal Audits and HUD Compliance Control: We are implementing an internal audit and compliance control program to regularly review and assess our income calculation and verification This proactive approach will help identify and address potential issues before they escalate. We have hired an outside consultant skilled in HUD compliance to review all new applications for compliance and to communicate with staff the corrections needed before tenant applications are submitted to CMS and Trac for final approval and payment. 4. Enhanced Documentation: We understand the significance of maintaining detailed and accurate documentation. Our organization is implementing measures to enhance documentation practices, ensuring that all relevant information is recorded and readily available for audit purposes. By doing this, we assure you that this will not be a repeat finding. 5. Communication and Collaboration with HUD: We are committed to maintaining open lines of communication with the HUD office. Any changes to our procedures, policies, or protocols related to income calculation and verification will be promptly communicated to the HUD office for review and feedback. We aim to ensure that our organization fully complies with HUD requirements and that we continue to provide accurate and reliable information for HAP eligibility.

Condition 2: The Authority did not submit its audited financial statements to the Federal Audit Clearinghouse and to REAC by the required due dates. Corrective Action 2: The Authority has retained an accounting firm to serve as a fee accountant. Our fee accountants will complete the unaudited Financial Data Schedule submission and provide workpapers to the auditors to enable a timely audited submission. Completion Date: September 30, 2023

View of Responsible Officials and Planned Corrective Action This finding relates to the late deposit of the required amount to the Replacement for Reserve as required by HUD. The late deposits were due to the timing of cash flows and the deficiency of cash available to make the deposit. The property manager is in the process of working with HUD to increase rents and make the property more financially self-sufficient. The late deposits were made to the Replacement for Reserve before the end of the Organization’s year end, September 30, 2022. Therefore, no further corrective action plan is deemed necessary at this time.

Phillips County Housing Authority respectfully submits the following corrective action plan for the year ended December 31, 2022. Contact person responsible for corrective action: Ms. Edna Turner, Executive Director Name and address of independent public accounting firm: Miller & Rose, PA 1309 East Race Searcy, AR 72143 Audit period: Year ended December 31, 2022 Oversight Agency: U.S. Department of Housing and Urban Development Federal Financial Assistance Listing No. 14.871 Housing Choice Voucher 2022-001 Tenant Files Condition and Criteria: The Authority’s purpose for existence is providing decent, safe and affordable housing to low-income persons. As such, the Authority prepares a file for each admitted family, which contains information necessary to determine eligibility for assistance and calculations of rent assistance to be paid on the family’s behalf. HUD regulations prescribe the content of these family files. These requirements consist of the following: a. 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. b. For both family income examinations and reexaminations, obtain and document in the family file third party verification of: (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income-based rent. c. Determine income eligibility and calculate the tenant’s rent payment in accordance with HUD regulations. d. Select tenants from the public housing waiting list in accordance with the PHA’s tenant selection policies. e. Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary. Population and Items Tested: Testing of the thirty-seven files revealed the following deficiencies: 1. One file lacked proper utility allowance documentation. 2. One file revealed an incorrect Housing Assistance Payment. 3. One file in which a lease and housing assistance payment contract was not executed. Recommendation for Corrective Action: A thorough review of tenant files should be performed for the purpose of eliminating the deficiencies. Responsible Official’s Response: We will comply with the auditor’s recommendation. We continue to strive to eliminate any deficiencies in this area. We have instituted checklists and review procedures to preclude any errors in documentation. Anticipated Completion Date: November 1, 2023

The management overseeing the process has been completely replaced to ensure a fresh perspective and unwavering dedication to implementing robust internal controls. To address the shortcomings identified in Finding 2022-003, the Authority commits to a targeted action plan aimed at ensuring timely compliance with reporting requirements. Central to our approach is the engagement of a fee accountant, recognized for expertise in HUD reporting and public housing financial management. This specialist will be tasked with overseeing and streamlining our reporting processes. By leveraging this expertise, we aim to quickly rectify past reporting lapses and ensure future submissions are timely and compliant with HUD requirements. The new fee accountant will conduct a comprehensive review of our current reporting mechanisms, identify bottlenecks, and implement best practices tailored to our operations. This decisive action, centered around the expertise of the newly appointed fee accountant, demonstrates our commitment to enhancing our financial management practices and aligning with HUD's reporting expectations. Through these measures, we anticipate not only meeting HUD's deadlines but also setting a new standard for operational excellence within our Authority.

n response to this finding regarding non-compliance in Housing Quality Standards (HQS) enforcement, the new management team at the Authority has developed a focused corrective action plan. This plan includes comprehensive staff training on HUD regulations and HQS compliance, with a completion target of September 2024. Concurrently, our CEO will oversee the revision and implementation of enhanced HQS monitoring procedures, aiming for completion by September 2024. This involves updating inspection protocols, instituting regular internal audits for compliance, and establishing clear procedures for re-inspections, HAP abatement, and voucher cancellations. Recognizing the oversight of the previous management, the new team is committed to rectifying these issues and ensuring ongoing compliance. We will maintain thorough documentation of all actions taken and provide regular updates on the progress. The HCV Coordinator will be responsible for ongoing compliance monitoring and reporting, ensuring that the program adheres to HUD's Housing Quality Standards and effectively serves its participants. This approach reaffirms our dedication to upholding the integrity and effectiveness of the Housing Voucher Cluster programs

Finding Number: 2022-009 Planned Corrective Action: Monthly financial statements are now completed to ensure evidence for each entity. The staff in finance is working on more timely audits. Anticipated Completion Date: September 2024 Responsible Contact Person: Sherrie Boudinot

Finding Number: 2022-008 Planned Corrective Action: AMHA is now in contract with the Nelrod company to do our Rent Reasonableness. Anticipated Completion Date: June 2024 Responsible Contact Person: Zackary Dye/Erica Flanders

Finding Number: 2022-007 Planned Corrective Action: The previous director processed payroll using one program (one time). The Finance Director & Accounting Assistant always allocate between properties at the approved amounts. The Director/Finance Director will review all payroll. Anticipated Completion Date: January 1, 2023 Responsible Contact Person: Sherrie Boudinot

Finding Number: 2022-006 Planned Corrective Action: The Executive Director no longer performs any accounting duties. An accounting firm was hired to bring everything up to date and an Accounting Assistant was hired. A new Fiscal Procedures Manual has been approved by the board. Only one Housing Assistance Payment bank account is now used; fraudulent checks were written out of the “general account” that checks are not normally written from, this account has been closed. Anticipated Completion Date: January 1, 2023 Responsible Contact Person: Sherrie Boudinot

Finding Number: 2022-005 Planned Corrective Action: AMHA and our accounting firm are working diligently to meet deadlines. Completed bank recs and financial documents are finished more timely. Anticipated Completion Date: January 1, 2023 Responsible Contact Person: Sherrie Boudinot

Finding Number: 2022-004 Planned Corrective Action: AMHA has contracted with the Inspection Group and is also working on a contract with HAPCAP to also do inspections to ensure that all inspections are done in time. If the unit fails a second inspection, in most cases the HAP is abated, or a formal extension is granted on occasion. Anticipated Completion Date: January 1, 2023 Responsible Contact Person: Erica Flanders

The City currently has a process in place to scan copies of invoices for fixed asset additions as the disbursements are made through the biweekly accounts payable cycle to facilitate reclassification entries at year end. The City will begin to add these items to the fixed asset schedules as soon as the expenditures are incurred to ensure that the depreciation schedules agree with the trial balance at year end. Staffing changes in the personnel responsible for grant management during the year hindered the City?s ability to submit timely grant reimbursement requests. The City has subsequently redistributed the staff assignments for grant management and the finance department staff have been working closely with the newly assigned personnel to ensure accurate reporting going forward. All staff with responsibilities for grant management have access to shared documents on the server to cross check the departmental records to promptly identify and resolve any discrepancies.

2022-004 Special Tests and Provisions – Selection from the Waiting List Section 8 Housing Choice Vouchers Program – CFDA Number 14.871 Mainstream Vouchers – CFDA Number 14.879 Material Weakness in Internal Control and Material Noncompliance Condition: 13 out of 123 new admissions were tested. Exceptions were noted as follows: • 3 tenant file errors where the HAP contract was not signed by the Authority until after 120 days of the tenant’s move-in date, but was signed by the landlord within 120 days of the tenant’s move-in date (adoption of HUD COVID waiver). • 1 tenant file error where the tenant’s application date, time, and preference did not agree to the date, time, and preference recorded on the waiting list. The tenant should have been housed earlier based on the tenant’s application date, time, and preference. • 1 tenant file had the following errors: o The HAP was not signed by the Authority until after 120 days of the tenant’s move-in date, but was signed by the landlord within 120 days of the tenant’s move-in date (adoption of HUD COVID waiver). o The tenant’s application date and time did not agree to the date, time, on the waiting list. The tenant should have been housed earlier based on their application date, time, and preference. • A separate waiting list was maintained for tenant based mainstream vouchers in the same county or municipality covered by the regular Section 8 waiting list (the mainstream waiting list has currently been exhausted). The Authority’s administrative plan does not allow a separate waiting list for the mainstream vouchers. In addition, the separate tenant based mainstream voucher waiting list was ranked randomly by the Authority’s system through a lottery ranking technique. This is not in compliance with the Authority’s administrative plan, which states that the waiting list should be organized by preference point and then by date and time of application (first come first serve basis). Recommendation: The Authority should correct the deficiencies and ensure staff is aware of acceptable procedures as outlined in the Authority’s Administrative plan. In addition, the Authority should review staffing levels, skill sets and case load. Furthermore, the Authority should utilize an ongoing quality control review process to ensure proper procedures are being followed. Action Taken: We concur with the recommendation. Due to the COVID-19 pandemic and related staff absences and turnover, we were unable to provide an ongoing quality control review processes and provide ongoing staff training and timely management reviews. We are focused on implementing such procedures and will review staffing levels, skill sets, and case load for each employee.

2022-003 Eligibility – Tenant Files Section 8 Housing Choice Vouchers Program – CFDA Number 14.871 Mainstream Vouchers – CFDA Number 14.879 Material Weakness in Internal Control and Material Noncompliance Repeat of Finding from March 31, 2021 (Finding 2021-003, Significant Deficiency) Condition: Out of a total tenant population of approximately 1,775 tenants, 25 files were selected for testing, but testing was suspended after 24 files due to the number of errors. Exceptions were noted as follows: • 1 tenant file error where the Authority performed their rent reasonableness procedures on a 2-bedroom unit for a 1-bedroom unit, and the comparable rents did not appear reasonable. • 1 tenant file had the following errors and correcting the errors would decrease the HAP rent by $23: o 1 error for miscalculation of the tenant’s social security income o 1 error for miscalculation of the tenant’s medical expense. • 1 tenant file had the following errors: o Two members of the household did not check the box on the 214-affidavit form indicating their eligible immigration status, but based on their birth certificates, they have eligible immigration status. o Miscalculation of the tenant’s utility allowance amount. Correcting the utility allowance amount would not change the HAP rent. • 1 tenant file error where the utility allowance amount was calculated correctly but was reported incorrectly on the 50058 form. Correcting this error would not change the HAP rent. • 1 tenant file had the following errors: o The 50058 form reported the wrong number of bedrooms in the unit. o The tenant did not sign the lease agreement. • 1 tenant file error where the tenant’s utility allowance amount was calculated incorrectly. Correcting the utility allowance amount would not change the HAP rent. • 1 tenant file had the following errors & correcting the errors would decrease HAP rent $11: o Miscalculation of the tenant’s social security income o Miscalculation of the tenant’s medical expense. • 1 tenant file had the following errors and correcting the miscalculation of tenant’s income and utility allowance would decrease the HAP by $8.: o Miscalculation of the tenant’s supplemental security benefit o Miscalculation of the tenant’s utility allowance amount. o The tenant’s supplemental security benefit income was coded as social security income when it should have been coded as supplemental income on the 50058 form. o Missing 214-affidavit form for a member in the tenant’s household, but based on their birth certificate, they have eligible immigration status. o Member of the household, over the age of 18, did not sign and date the 9886 form. o The HAP contract was not signed and dated by the Authority. • 1 tenant file error due to a missing signed lead base paint form. • 1 tenant file had the following errors: o The 50058 form incorrectly reported the tenant’s monthly rent. Correcting this error increases the HAP rent by $8. o The lease agreement’s signature page is missing. • 1 tenant file error where the rent reasonableness procedure was performed one month after the tenant’s move-in date. The rent appears reasonable, but should have been performed before the tenant’s move-in date. • 1 tenant file had the following errors: o Missing HAP contract and lease agreement. o Missing rent reasonableness support. • 1 tenant file error for missing rent reasonableness support. • 1 tenant file had the following errors: o The utility allowance amount was calculated correctly but was reported incorrectly on the 50058 form. Correcting this error would not change the HAP rent. o The lease agreement’s signature page is missing. • 1 tenant file had the following errors: o Miscalculation of the tenant’s social security income. Correcting the miscalculation would decrease the HAP by $2. o Miscalculation of the tenant’s annual unreimbursed medical expense. Correcting the miscalculation would have no effect on the HAP rent. o The tenant’s name was reported incorrectly on the 50058 form. • 1 tenant file had the following errors: o A member of the household did not check the checkbox on the 214-form indicating their immigration status. However, based on the tenant’s birth certificate, the tenant has eligible immigration status. o A member of the household over the age of 18 didn’t sign and date the 9886 form. o General assistance was included as household income when it should have been excluded. Correcting this error would increase the HAP rent by $12. o Missing rent reasonableness support. o The landlord did not sign the lease agreement. • 1 tenant file had the following errors: o A member of the household did not check the checkbox on the 214-form indicating their immigration status. However, based on the tenant’s birth certificate, the tenant has eligible immigration status. o Missing support for total annual unreimbursed childcare costs. o Missing support for total annual unreimbursed medical expense. Recommendation: The Authority should correct the deficiencies noted in the tested files and utilize an ongoing quality control review process on the entire tenant population to ensure proper compliance with the requirements related to tenant eligibility. Ongoing staff training and timely management reviews should be utilized to ensure staff is aware of acceptable procedures. In addition, the Authority should review staffing levels, skill sets and case load. Action Taken: We concur with the recommendation. Due to the COVID-19 pandemic and related staff absences and turnover, we were unable to provide an ongoing quality control review processes and provide ongoing staff training and timely management reviews. We are focused on implementing such procedures and will review staffing levels, skill sets, and case load for each employee.

2022-005 Special Tests and Provisions – UEL Formula (Form 52722) and Formula Income Public and Indian Housing Program – CFDA 14.850 Material Weakness in Internal Control and Material Noncompliance Condition: Unable to test HUD Form 52722, 52723, and the utility ledger for accuracy and completion. Recommendation: The Authority should retain hard copies or electronic copies of HUD Form 52722, 52723, and the utility ledger for each fiscal year under audit. Action Taken: We concur with the recommendation. Due to the ongoing COVID-19 pandemic and related staff absences and turnover, we were not able to locate hard copies or electronic copies of HUD Form 52722, 52723, or the utility ledger. We will retain hard copies or electronic copies of HUD Form 52722, 52723, and the utility ledger for each fiscal year under audit.

2022-002 Reporting – Inaccurate and Late FDS Submission and Late OMB Data Collection Form Submission Public and Indian Housing Program – CFDA Number 14.850 Section 8 Housing Choice Vouchers Program – CFDA Number 14.871 Mainstream Vouchers – CFDA Number 14.879 Material Weakness in Internal Control and Material Noncompliance This is a repeat finding of 2021-002 from March 31, 2021 (initially occurred as Finding 2020-002 from March 31, 2020) Condition: The Authority’s original unaudited FDS filing did not include the Authority’s blended component unit. In addition, the unaudited FDS filings were not submitted within the timeframes specified by HUD. The Authority submitted the unaudited FDS filing on May 10, 2023 (the due date was May 30, 2022). The Authority was also required to submit the OMB Data Collection form to the Federal Audit Clearinghouse (“FAC”) by December 31, 2022 at completion of the single audit, but was not filed timely as the audit was completed on September 9, 2024. Recommendation: The Authority should make every effort to file its REAC submissions accurately and timely and submit the OMB Data Collection form timely. Action Taken: We concur with the recommendation. Due to the COVID-19 pandemic and related staff absences and turnover, we were not able to accurately close the books before the HUD specified unaudited FDS filing deadline and unable to timely file the OMB Data Collection Form. We are very focused on ensuring there is adequate staffing and sufficient processes in place in order to be able to close the books prior to submitting a materially accurate unaudited FDS submission for the following fiscal year as well as timely file the OMB Data Collection Form.

With the newly hired staff as of October 2022, the process of selecting eligible tenants from the list has been accomplished by identifying the preference and verifying in writing th ereason for such preference to move forward with the housing the applicant. All verification is kep tin the eligible tenant file. the existing staff has had 10-15 years' experience maintaining Federal program waiting list.

When the new director, Robert Weismore, was hired on September 7, 2022, he replaced the former director and 3 staff members. In October he hired the current staff of Ms. Schaefer, Ms. Lynn. Ms. Filipski was hired as a part time employee in the middle of September 2022. For the next 2 months the staff reviewed each file and recalculated the figures using the correct payment standards for the necessary period and also used the September 1, 2022 approved utility schedule installed by the current staff. The recalculations caused the North Syracuse Housing Authority to reimburse $25,463 to previously miscalculated tenants. Also, had to repa HUD $23,000. The current payment standards are up to date and the current utility schedule was updated effective 7/1/2023 and will be updated effective 7/1/24 and each July thereafter.

Please see 2020-008 regarding payment standards and utility schedules. The current staff updated the current rent reasonableness comparisons during the summer of 2023. This was accomplished by completing a survey of area wide rents and amenities for comparable units. Each folder has a rent reasonableness form showing the comparables and justifying the rent being changed is eligible and within reason.

When the current director, Robert Weismore was appointed his first obligation was to inspect 51 units that had been neglected by the former staff. As documentation in the files all previous nspections have been completed. The current staff, Sarah Schaefer, has become a certified inspector after completing the necessary course and passing the exam. All inspections whether annual or bi-annually are all completed within the time frame directed by HUD. The director currently will complete the supervisory inspections based on the percentage of program participation directed by HUD regulations.

The new director and staff know that SEMAP reports are due annually. They also know that the report is the responsibility of the director to complete the SEMAP filing. The director who was in place during the 2019-2020-2021 should have filed the SEMAP report.

Effective 11/1/2022 all recommendations are completed with up to 90 days notice to prospective tenant, with notification as the proper verification needed to complete the recert to completion. Notification is also sent to the owner of the recertification. Once the proper verification is completed calculations are completed the tenant and owner are mailed an addendum stating new rental breakdown. The new current staff has between 10 and 15 years' experience completing recertifications. Please see item 2020-008 regarding utilities and payment standards.

2022-001 Underpayment of the contingent mortgage As of December 31, 2022, $173,798 had been paid through the refinancing of the mortgage on April 26, 2022, which is 26 days after the 90-day period. Surplus cash was paid off with the close of the mortgage in the refinance. Karen Burkett, Managing Agent

On March 22, 2023, the Corporation paid $6,034.05 for overpayment of Management Agent Fees. The Corporation will reimburse the Project for the Management Fee Overpayment and Payroll Cost of the remaining balance due of $12,526.95.