Finding 2025-010: Noncompliance and Significant Deficiency – Allowable Activities and Allowable Costs Agreement or Disagreement: The Agency agrees with the finding. Planned Corrective Action: The Agency will establish written cost-allocation procedures to ensure that expenditures are charged only to the program receiving the benefit and that all allocations are reasonable, equitable, consistently applied, and adequately supported. The Agency will take the following actions: Cost-Allocation Procedures • Review all methodologies used to allocate shared costs among the Public Housing, Housing Choice Voucher, and other Agency programs. • Establish written procedures identifying allowable costs, allocation methods, required supporting documentation, and approval responsibilities. • Ensure costs directly benefiting one program are charged entirely to that program. • Allocate shared costs using a reasonable and documereplacented basis that reflects the benefit received by each program. • Review and update allocation methodologies whenever programs, staffing, services, or operating conditions change. Property Insurance and Prior Allocations • Review property insurance expenses to ensure costs associated with Public Housing properties are not charged to the Housing Choice Voucher Program. • Verify and correct the $14,202.98 property insurance allocation identified during fiscal year 2025. • Review the approximately $24,964.76 in similar allocation errors identified during the two preceding fiscal years. • Record all necessary correcting entries in accordance with applicable accounting requirements and guidance from the Agency’s auditor. • Retain documentation supporting the review, calculations, correcting entries, and final disposition of the prior-period amounts. Documentation and Supervisory Review • Require invoices, allocation calculations, and supporting documentation to be reviewed before expenditures are charged to a federal program. • Implement a supervisory approval process for shared costs and expenditures affecting multiple programs. • Document the allocation basis, calculation, programs charged, reviewer, and date of approval. • Periodically review significant expense accounts to identify allocation errors and ensure corrections are made promptly. • Reconcile financial reports and general-ledger activity to supporting invoices and allocation documentation. Training and Ongoing Monitoring • Provide training to accounting and administrative personnel regarding federal cost principles, allowable costs, and allocability requirements. • Ensure staff understand that federal program funds may only be used for costs that benefit that program. • Conduct periodic internal reviews of expenditures charged to the Housing Choice Voucher Program. • Report the results of monitoring activities and any unresolved allocation issues to the Executive Director and Board of Commissioners. • Provide additional training or corrective guidance when errors or inconsistencies are identified. Management will periodically evaluate compliance with the cost-allocation procedures and report the results and any unresolved deficiencies to the Board of Commissioners. Estimated Completion Date: Written cost-allocation procedures and supervisory review requirements will be implemented by October 31, 2026. The review and correction of the fiscal year 2025 property insurance allocation and prior-year allocation errors will be completed by December 31, 2026, with quarterly monitoring thereafter. Responsible Parties: Executive Director, financial and accounting personnel, applicable program staff, contracted accounting professionals, and Board of Commissioners.