HIGHLAND PARK HOUSING COMMISSION

Finding No: 2025.001 Type: Internal control deficiency over financial reporting Condition: We identified an internal control deficiency in the accrual process of the Commission, related to a number of material unrecorded adjustments Criteria: Generally Accepted Accounting Principles (U.S. GAAP) Amount: Current year revenue was overstated by $202,604 cumulatively, current year receivables were understated by $304,063. Cause: There were two instances of grant revenue that should have been accrued in the prior year and overstated revenue by $506,667. There was one instance of interest revenue that should have been accrued in the current year and understated revenue by $304,063. Effect or Potential Effect: 1. Unaudited financials had revenue that was overstated by $202,604, and receivables that were understated by $304,063. 2. Other material accruals could mean over or understated revenue, expenses, assets, and liabilities in the current fiscal year. Repeat Audit Finding: No

Finding No: 2024.001 Type: Noncompliance with provisions of contracts or grant РLIHP Public Housing Tenant Files, Material Weakness Public Housing Program РAssistance Listing No. 14.850; Condition: We identified the following non-compliances: 25 files were reviewed from a population of 197 tenant files: 2 recertification were not complete within 12 months, 2 recertifications were backdated, 2 did not have income verification, and 2 did not show rent payment calculation. Criteria: The Code of Federal Regulations and HUD guidelines give the requirements for maintaining tenant files for the Public Housing and Housing Choice Voucher programs. Ҥ 960.257 Family income and composition: Annual and interim reexaminations. Amount: Not applicable Cause: There was staffing turnover and management changes throughout the year. Effect or Potential Effect: 1. Rents could be over/understated 2. Ineligibles participants could be afforded use of the Federal assistance program 3. Violation of HUD regulations and guidelines, and FHC policies and procedures Repeat Audit Finding: Yes

"Finding: 2020-001 Type: Material Weakness Internal Control Condition Criteria: 24 CFR ? 960.201(c) Reporting. The PHA must comply with HUD-prescribed reporting requirements that will permit HUD to maintain the data, as determined by HUD, necessary to monitor compliance ? Amount: Not applicable Context: The current `Fee Accountant? provided support for the samples they were responsible for. The third party bookkeeper did not provide for the samples they were responsible for. Cause: HUD took over the management of the affairs of HPHC and hired a new `Fee Accountant?. The new Fee Accountant took over bookkeeping in July of 2020 Effect: Support for 19 out of 25 expenses selected for testing was not available Recommendation: HPHC should have in place a process that ensures records supporting all activities are maintained and available for review. Response: Continental Management, LLC (?CM?), as agent for HPHC, is maintaining records and supporting documents. CM has implemented internal controls currently in place ensuring supporting records and activities are maintained and available for review. All stored documents are on a common drive backed up nightly as to minimize the chance documents will be lost. As of the date HUD took receivership of HPHC's board."

Finding 2019-004 Type Material Noncompliance, 14.850 Compliance and Internal Control Condition Criteria 24 CFR ? 960.201(c) Reporting. The PHA must comply with HUD-prescribed reporting requirements Amount Not applicable Context HPHC experienced water damage in its offices and common areas and two fires in 2018 that destroyed at least some records and disrupted operations. Cause HPHC could provide only bank statements, general ledger details, rent rolls, and security deposit documents to demonstrate program compliance and adequate internal control. No tenant files were available for testing. Effect HPHC could not demonstrate adequate compliance or internal control over compliance for a major Federal program as required by the Uniform Guidance. Recommendation HPHC should organize, update, and reconstruct its tenant files immediately. Response Agreed.