HOUSING AUTHORITY OF THE TOWN OF WINDSOR LOCKS

U.S DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Finding 2023-001: Allowable Activities / Allowable Costs Public Housing #14.850 Statement of Condition and Criteria Audit reporting of interfund receivable balances owed to the Public Housing program from the State and Local program indicated potential unallowable uses of program funds. Public housing operating funds are to be used for project-specific operating costs and are further precluded from use as temporary loans to other programs. Cause Cash management procedures do not always allow for sufficient cash reserves to cover interfund balances. Effect or Potential Effect Public housing funds were used for other programs which could remain unpaid if the receiving program has a cash flow shortfall as had occurred as of the fiscal year end. Question Costs: $67,198 Recommendation We recommend the Authority reconcile and settle interfund balances on a monthly basis. In addition, we recommend the Authority establish controls to restrict interfund transactions for which there is no certainty of reimbursement before the accounting period cutoff. Management’s Response Management agrees with the finding and corrective action is in progress as detailed in the Corrective Action Plan.

U.S DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Finding 2022-002: Segregation of Duties Allowable Activities / Allowable Costs Housing Voucher Cluster #14.871 Significant Deficiency Financial Statement Finding 2022-001 applies to this federal program. Statement of Condition The Executive Director was responsible for most of the accounting functions including the procurement and authorization of expenditures. Criteria There should be proper segregation of duties so that no single individual has access to authorization, recording, custody, or reconciling of assets. This is to ensure that unintentional or intentional errors are detected in a timely fashion. Cause The Authority relied on the former Executive Director until departure without adequate oversight and review. Effect or Potential Effect Executive Director had access to expend resources for unallowable expenses. Recommendation We recommend the Authority adhere to policies involving the segregation of duties to allow for effective authorization and monitoring procedures. Management?s Response Management agrees with finding, see Corrective Action Plan for plan of action.

U.S DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Finding 2022-003: HCV Program Management - HUD Monitoring Review Special Tests and Provisions Housing Voucher Cluster ? CFDA #14.871 Material Weakness Statement of Condition HUD conducted a Monitoring Review in September 2022 resulting in 23 findings pertaining to the Housing Voucher Cluster primarily pertaining to the lack of sufficient policies and procedures to administer the Housing Choice Voucher program. In addition, the audit noted that the Authority was unable to provide documentation for HQS inspections conducted or enforcement actions taken. Criteria The Authority is to ensure that leased units meet Housing Quality Standards prior and during the term of occupancy in accordance with HUD rules and regulations. Cause The Authority relied on the former Executive Director to conduct HQS inspections and such prior inspections were not tracked and/or documented in participant files. Effect or Potential Effect Staff was unable to effectively monitor, or track inspection deadlines and units were assisted without conducting HQS inspections within the required timeframes. Context A sample of 15 files were selected to audit HQS inspections from a population of 110. The test found five files lacked a current year inspection including three of which that indicated prior failed HQS items without evident of enforcement or passed inspection from the prior year. Recommendation The Authority must conduct, track, and enforce HQS inspection in accordance with its HCV Administrative Plan, as currently revised. In addition, the Authority should implement a process for supervisory quality control HQS inspection to ensure adherence to its policies and comply with HUD Requirements. Management?s Response Management agrees with finding, see Corrective Action Plan for plan of action.

Finding No. 2021-002: Low Rent Public Housing, CFDA #14.850Compliance Requirement: Activities Allowed or UnallowedType of Finding: Noncompliance, Significant DeficiencyCondition: Testing of interfund receivable balances owed to the Low Rent Pubic Housing (LRPH) program from the State and Local program indicated potential unallowable uses of LRPH grant funds.Criteria: The Operating Fund is designed to make financial assistance available to PHA's for the operation and management of public housing. The use of a centralized revolving fund allows the use of one program's cash to cover expenses of another program which is subsequently reimbursed within a reasonable amount of time. Inter-program due to and due from balances, not reconciled on a timely basis, indicate the existence of temporary loans and are unallowable.Cause: The State and Local program had not generated sufficient cash required to reimburse the revolving fund for expenses incurred on its behalf before the end of the operating cycle.Effect: It appears LRPH funds in the amount of $61,155 were used to cover costs of non-federal programs. This is considered an unallowable use of grant funds and may be subject to repayment.Questioned Costs: N/ARecommendation: We recommend the Authority reconcile and settle interfund balances on a monthly basis. In addition, we recommend the Authority establish controls to restrict interfund transactions for which there is no certainty of reimbursement before the accounting period cut-off.

Finding No. 2020-001: The Housing Authority?s internal controls over accounting and financial reporting were inadequate to ensure the prevention and detection of fraud. Condition The current audit identified the following deficiencies in internal controls that, when taken together, represent a material weakness: ? The Executive Director has full access to all systems without adequate oversight and monitoring of her activities. ? The Housing Authority?s secondary review of the financial statements was inadequate to detect and prevent errors and irregularities before submitting the annual financial report for audit. Criteria Housing Authority management, state and federal agencies, and the public rely on the information included in financial statements and reports to make decisions. Housing Authority management is responsible for designing and following internal controls that provide reasonable assurance regarding the reliability of financial reporting. Cause The Housing Authority relied on the Executive Director for the payment of all disbursements, without adequate oversight and review. Effect As a result of the material weakness in internal controls, the Executive Director paid off personal credit cards in excess of legitimate Housing Authority expenses. Questioned Costs $5,310. ($2,777 to Low Rent Public Housing, $877 to Housing Choice Voucher, the rest non-federal) Recommendation We recommend the Housing Authority re-evaluate and strengthen internal controls over the financial systems and preparation of the financial statements. These controls should include: ? Proper monitoring of financial transactions and bank statement activity to ensure financial errors and irregularities are prevented or quickly detected. This includes properly reconciling the general ledger to the bank accounts, evaluating and limiting employee access to accounting systems based on job responsibilities, limiting wire transfer capabilities, reviewing all checks and disbursements at monthly at board meetings, and considering requiring dual authorizations. ? Getting a Housing Authority issued credit card that is regularly monitored and used solely for Authority purposes. ? Issuing checks based on the government per diem rates at the applicable travel locations for staff travel rather than direct reimbursement of expenses for meals.

Finding No. 2020-002: The Housing Authority?s internal controls over accounting and financial reporting was inadequate to detect and prevent errors and irregularities before submitting the annual financial report for audit. Condition The current audit identified credits to the revolving fund bank account that were listed on the bank statements as ?chargebacks?. Housing Authority staff could not provide backup for these transactions and did not have any explanation for them. We tried to track them down through the bank but the bank had been bought from another bank and the new bank could not go back and pull information on the transactions. Criteria Housing Authority management, state and federal agencies, and the public rely on the information included in financial statements and reports to make decisions. Housing Authority management is responsible for designing and following internal controls that provide reasonable assurance regarding the reliability of financial reporting. Cause The Housing Authority did not have proper controls in place to document these chargebacks and ensure that they were properly accounted for in a timely manner. Effect The Housing Authority?s financial statements may be misstated and funds may have been misappropriated. In addition, unallowable costs or costs not related to a federal program may be erroneously booked to a federal program. In this case, these chargebacks were allocated to the Federal Public Housing Program. Questioned Costs $6,913. (All Low Rent Public Housing Program) Recommendation We recommend the Housing Authority re-evaluate and strengthen internal controls over the financial systems and preparation of the financial statements. These controls should include proper monitoring of financial transactions and bank statement activity to ensure financial errors and irregularities are prevented or quickly detected. This includes properly reconciling the general ledger to the bank accounts, limiting wire transfer capabilities, reviewing all checks and disbursements at monthly at board meetings, and considering requiring dual authorizations.