Finding 1153143 (2024-002)

Agency: Department of Housing and Urban Development ALN: 14.871, ID # NC145 Program Year: 2023 – 2025 Compliance Requirement: Reporting Finding Number 2024-002: Reportable Finding Considered a Material Weakness - Inaccessibility of Accounting Records Condition: EIC failed to timely file the audited REAC submission for the fiscal year ended June 30, 2023, and the unaudited REAC submissions for the fiscal years ended June 30, 2023, June 30, 2024, and June 30, 2025: 1) Audited (FYE 6/30/2023): Due 3/31/2024; not submitted (529 days past due). 2) Unaudited (FYE 6/30/2023): Due 8/31/2023; submitted 9/9/2025 (740 days late). 3) Unaudited (FYE 6/30/2024): Due 8/31/2024; submitted 9/11/2025 (376 days late). 4) Unaudited (FYE 6/30/2025): Due 8/31/2025; not submitted as of 9/11/2025 (11 days past due). Criteria: HUD requires PHAs to submit unaudited financial data to REAC within 2-month of FYE and audited financial statements within 9 months of FYE. These requirements are established under HUD’s financial reporting regulations and guidance (e.g., 24 CFR §5.801 and 24 CFR §902.33, HUD due‑date schedule). Cause: EIC did not maintain a formal compliance calendar and escalation protocol to track and meet REAC deadlines; monitoring controls around reporting timeliness were insufficient. Effect: Noncompliance with HUD’s direct‑and‑material Reporting requirement; exposure to PHAS penalties, including potential Late Presumptive Failure (LPF) designation and delayed oversight by HUD due to untimely financial reporting. Questioned costs: There are no questioned costs in association with this finding. Repeat finding: This is not a repeat finding. Recommendation: EIC should implement a formal reporting calendar with automated reminders for the 2-month (unaudited) and 9‑month (audited) deadlines; assign primary and backup owners; and institute an escalation protocol to executive leadership/board when deadlines are at risk. Management’s response (unaudited): See Corrective Action Plan