Finding Text
2023-001 Reporting – Late REAC Submission and Late OMB Data Collection Form Submission
Section 8 Housing Voucher Cluster (Section 8):
14.871 Section 8 – Housing Choice Vouchers
Material Weakness in Internal Control, Material Noncompliance
Condition: The Authority’s audited Financial Data Schedule (“FDS”) filing was not submitted within the timeframes specified by HUD. The FDS filing was due by June 30, 2024, but the financials were not issued until June 3, 2025. The Authority was also required to submit the OMB Data Collection Form to the Federal Audit Clearinghouse (“FAC”) by June 30, 2024, but was not filed timely as the audit was completed on June 3, 2025.
Criteria: The Real Estate Assessment Center ("REAC") requires an accurate and timely submission of the audited FDS information. The OMB Data Collection Form is due to be electronically filed with the FAC at the completion of a Single Audit (but no later than 9 months after fiscal year end, unless extended).
Questioned Costs: None.
Effect: The Authority did not submit the audited FDS within the timeframe required by HUD, and therefore was noncompliant with this reporting requirement as well as the requirement to submit the OMB Data Collection Form within the required time frame. Failure to properly submit timely data could lead to significant issues including penalties and delays in funding.
Cause: The audit delays and noncompliance stemmed from a combination of operational, leadership, and financial capacity challenges that significantly impacted the Authority’s ability to meet HUD’s reporting requirements.
• Leadership Instability: For several years, the Authority lacked a permanent, full-time Chief Executive Officer (CEO), resulting in inconsistent oversight of daily operations and strategic financial management. This leadership gap contributed to delays in decision-making and hindered effective communication with auditors and HUD.
• Financial Capacity Constraints: The Authority has faced persistent financial capacity challenges over the past two years. In April 2024, a new Chief Financial Officer (CFO) was hired; however, within the first two months, two Accounting Clerks resigned. All three staff members had limited experience navigating HUD systems and preparing the Financial Data Schedule (FDS), further straining the Authority’s ability to meet compliance deadlines.
• Vendor and Software Disruptions: The previous administration’s decision to terminate the longstanding partnership with BDO PHA Finance and revert from Yardi to SACS software led to significant disruptions. BDO, a key financial partner, declined to continue services under the new software. During the transition, Yardi withheld access to financial data due to unpaid invoices, which delayed audit preparation, funding draws (CFP, Operating, FSS, ROSS), and updates to HUD systems, including EPIC and FDS.
• Loss of Financial Records: In 2023, the Authority’s administrative building at 1000 Carthage Street, Sanford, NC, was vacated due to severe water damage from a leaking roof. The resulting mold and mildew rendered the building uninhabitable and destroyed critical financial records. At the time, the Authority did not utilize cloud-based storage or digital backups, which compounded the loss.
Recommendation: The Authority should ensure that they retain support for all required documentation and that it is organized and readily accessible. Storing documents electronically with frequent backups would help prevent loss of data from damage to any one location. Furthermore, the Authority should ensure that staff receives necessary training for proper document retention.
Views of Responsible Officials of the Auditee: The Authority concurs with this finding and will implement review procedures and provide ongoing training to staff.