Finding Text
Cause: Turnover of staff in the Housing Authority and delay in recruitment. Lack of internal control over the retention of program reports that form as the basis of the FASS-PH submissions. Effect or Potential Effect: The City may be subject to a permanent reduction or offset of administrative fees in an amount to be determined by HUD and demotion of the PHA’s SEMAP scoring one level. Questioned Cost: None. Context: The City obtained the notification from HUD dated on July 11, 2024 regarding a final notification of noncompliance related to financial reporting and PHA Plan requirements. The City submitted its audited financial statements for fiscal years 2021 and 2022 on June 25, 2024 and December 20, 2024, respectively. The auditor noted that the audited financial statements for fiscal year 2023 were submitted on June 10, 2025. The audited financial statements for fiscal year 2024 will be submitted in February 2026. Statistical Sampling Validity: Not applicable. Repeat of a Prior-Year Finding: 2018-007, 2019-005, 2020-001, 2021-002, 2023-004 Recommendation: We recommend the City establish policies and procedures that will ensure the submission of unaudited and audited financial information to HUD on a timely basis. Management Response and Corrective Action Plan City's Response: The City concurs with the recommendation. Corrective Action Plan: The City Controller’s Office drafted a Grants policy that is currently under review by City Management. Community development staff will ensure a succession plan is in place for any staff turnover and for report preparation compliance. The PHA Executive Director will work with the City Manager, City Controller’s Internal Auditor and Grants reporting team to ensure: 1. Timely reporting 2. There is viable Grants administration policy 3. There is an internal schedule and timeline in preparation for the submissions 4. There is Controller’s office and PHA staff dedicated to financial PHA reporting 5. That there’s an internal soft audit conducted by the aforementioned staff prior to HUD’s deadlines 6. Controller’s office staff is trained by Nan McKay on financial reporting for PHA’s (in process – Internal Auditor taking training in February 2026). 7. The Controller’s office will identify consultants to assist with timely audit submissions as deemed necessary by the City Manager, executive director and City Controller. Planned Implementation Date: July 2026 beginning of fiscal year with new funding and CHA/Controller’s officer reporting structure Responsible Person(s): City Manager, City Controller, PHA Executive Director, and Human Resources Director