2025-003 Procurement Material Weakness in Internal Control (Repeated in part from prior year, Finding No. 2024-003) Condition: For two of the four contracts tested, the contracts were not solicited in accordance with the Authority’s procurement policy. The contracts did not go through a formal solicitation process, and instead three informal bids were received. Additionally, none of the contracts tested contained quality control documentation to support internal controls. Auditor’s Recommendations: The Authority should strengthen their internal controls over procurement by implementing standardized procurement procedures, including documentation checklists and supervisory review processes to ensure compliance with procurement requirements. The Authority should also provide training to staff involved in the process to ensure they are aware of the requirements and processes. Management Response: Management acknowledges the findings and the material weakness in internal control and material noncompliance in procurement. We accept responsibility for the deficiencies in internal control over procurement and are committed to implementing corrective actions that address missing documentation and lack of verifiable procurement procedures to ensure compliance. • Implement Standardized Procurement Procedures: Update and implement a formal, written procurement policy that clearly outlines the procedures for sealed bids, proposals, and small purchases. • CHA has established and uses a procurement register to manage the lifecycle of acquired goods and services to ensure payment status and contract compliance. • Mandatory Documentation Checklist: Create a procurement file checklist for every contract to ensure all required documents—such as the independent cost estimate, advertisement, bidder list, evaluations, and justification for award—are included in the procurement file. • Supervisory Review Process: A supervisor will review and sign off on the procurement file document before the good or service is purchased. • Staff Training: Provide comprehensive training to all staff involved in procurement to ensure they understand HUD’s procurement standards, including requirements for full and open competition and proper record-keeping. o CHA is scheduled to have a reputable HUD procurement trainer give a one-and-a-half-day procurement training to staff and a half day board procurement training to help improve compliance and staff knowledge. • CHA is in the process of having a professional third-party vendor update its procurement and disposition policies. • Maintain Records: Ensure that all documentation for the full procurement cycle is maintained, including evidence that contractors are not debarred or suspended. Name of Responsible Person(s): Jackie Otto, Executive Director, Sherdana Wade, Director of Operations, and Natalie Hawks, Procurement Director Projected Completion Date: Some of the corrective activities are underway. We anticipate full compliance ahead of the June 30, 2027 audited submission.