Housing and Redevelopment Authority of Wadena, MinnesotaLocal Government

Audit Finding 2025-001 – Lack of Segregation of Duties Criteria: Internal control is a process, affected by the Housing and Redevelopment Authority of Wadena, Minnesota's (the Authority) board of commissioners, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. A good system of internal control provides for an adequate segregation of duties so that no one individual handles a transaction from its inception to completion. Condition: Due to the limited employees and resources available to the Authority, many aspects of the internal control structure that rely on segregation of duties are missing. Specific accounting processes noted that are affected by the lack of segregation of duties include cash disbursements, payroll disbursements, cash receipting, and specific reporting functions required for the Authority. Cause: Due to the limited number of personnel within the Authority, segregation of the accounting functions necessary to ensure adequate internal accounting control is not possible. This is not unusual in operations the size of the Authority; however, management should constantly be aware of this condition and realize that the concentration of duties and responsibilities in a limited number of individuals is not desirable from an accounting point of view. Effect: Inadequate segregation of duties could adversely affect the Authority’s ability to detect misstatements in amounts that would be material in relation to the financial statements in a timely period by personnel in the normal course of performing their assigned functions. Recommendation: We recommend that the Authority’s board of commissioners and management be aware of the lack of segregation of the accounting functions and, where possible, implement oversight procedures to ensure the internal control policies and procedures are being implemented by personnel to the extent possible. View of Responsible Officials: Management agrees with the finding.

Audit Finding 2024-001 – Lack of Segregation of Duties Criteria: Internal control is a process, affected by the Housing and Redevelopment Authority of Wadena, Minnesota's (the Authority) board of commissioners, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. A good system of internal control provides for an adequate segregation of duties so that no one individual handles a transaction from its inception to completion. Condition: Due to the limited employees and resources available to the Authority, many aspects of the internal control structure that rely on segregation of duties are missing. Specific accounting processes noted that are affected by the lack of segregation of duties include cash disbursements, payroll disbursements, cash receipting, and specific reporting functions required for the Authority. Cause: Due to the limited number of personnel within the Authority, segregation of the accounting functions necessary to ensure adequate internal accounting control is not possible. This is not unusual in operations the size of the Authority; however, management should constantly be aware of this condition and realize that the concentration of duties and responsibilities in a limited number of individuals is not desirable from an accounting point of view. Effect: Inadequate segregation of duties could adversely affect the Authority’s ability to detect misstatements in amounts that would be material in relation to the financial statements in a timely period by personnel in the normal course of performing their assigned functions. Recommendation: We recommend that the Authority’s board of commissioners and management be aware of the lack of segregation of the accounting functions and, where possible, implement oversight procedures to ensure the internal control policies and procedures are being implemented by personnel to the extent possible. View of Responsible Officials: Management agrees with the finding.

2024-002 – Audited REAC Submission Criteria: HUD requires that all Public Housing Authorities submit their audited financial data on an annual basis. Per 24 CFR 902.33, audited financial statements will be required no later than nine months after the PHA’s fiscal year-end, in accordance with 2 CFR part 200. Condition: The audited financial reports were not submitted in a timely manner. Cause: The Authority was not aware of the reporting deadline and as a result the Authority was late submitting their 2023 audit to REAC. Effect: The Authority did not have its financial reports submitted before the deadline leaving the Authority not in compliance with regulations, and at risk of losing points and funding. Recommendation: The Authority should submit financial reports in a timely manner going forward. The Authority’s financial records should be brought into compliance with HUD regulations. View of Responsible Officials: Management agrees with the finding.

Audit Finding 2024-003 – Federal Audit Clearinghouse Submission Criteria: 2 CFR §200.512 of the Uniform Guidance requires an entity expending more than $750,000 of federal funds in a fiscal year to submit a data collection form by a due date that is the earlier of 30 calendar day after receipt of the auditor’s report(s) or nine months after the end of the audit period. Condition: The Authority’s June 30, 2023 audited financial statements were not filed within the Federal Audit Clearinghouse submission within 9 months of the Authority’s year-end. Cause: The Authority was not aware of the reporting deadline and as a result the Authority was late submitting their 2023 audit to Federal Audit Clearinghouse. Effect: The Authority is not in compliance with Uniform Guidance requirements. Recommendation: We recommend the Authority become familiar with reporting requirements for each award and implement procedures to begin audit preparation work earlier in the fiscal year to ensure reports are filed within the nine-month reporting deadline set forth by Uniform Guidance. Views of Responsible Official: Management agrees with the finding.

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Finding 2023-003 – Housing Voucher Cluster, CFDA No. 14.871 and 14.879 – Inspections Condition The Authority does not maintain a list of units that have failed inspections. Units needing follow-up inspections are added to a calendar based on their follow-up inspection due date. The Authority does not retain the calendar documenting properties that failed inspections. The calendar is discarded at the end of the month, therefore management is unable to complete monitoring control procedures. Criteria Pursuant to 24 CFR 982.158(d) and 982.404, the Authority must follow up on the correction of failed inspections within 24 hours for life threatening housing quality standard (HQS) deficiencies or 30 calendar days for all other HQS deficiencies. Effect The potential exists that a tenant property that failed an inspection will not be reevaluated and deficiencies will not be corrected leading to noncompliance with HUD guidelines. Cause The Authority has not retained documentation demonstrating that properties with failed inspections have been re-inspected and that deficiencies have been corrected. Repeat Finding No Recommendation We recommend that management retain a list of properties that failed an inspection and subsequent documentation showing the dates of re-inspection and the results of subsequent inspections. Management’s Response The Authority agrees with the finding.

Finding 2022-003 ? Housing Voucher Cluster, CFDA No. 14.871 and 14.879 ? Reporting Criteria Pursuant to 24 CFR 982.158, the Authority must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements. HUD uses HUD-52681-B, Voucher for Payment of Annual Contributions and Operation Statement, via the Voucher Management System (VMS) to monitor the Authority?s Housing Choice Voucher program financial and operational performance. Condition During the audit we noted reporting issues in reporting the Authority?s restricted net position via the VMS. Activity related to the Mainstream grant were not included in the total. Cause The Authority does not have adequate levels of controls in place over reviewing reports. Repeat Finding Yes, 2021-002 Effect The Authority reported inaccurate information to HUD. Recommendation We recommend that management have more procedures in place to effectively reconcile, review, and submit required reports to HUD. Views of Responsible Official The Authority agrees with the finding.

Finding 2022-004 ? Housing Voucher Cluster, CFDA No. 14.871 and 14.879 ? Inspections Criteria Pursuant to 24 CFR 982.158(d) and 982.404, the Authority must follow up on the correction of failed inspections within 24 hours for life threatening housing quality standard (HQS) deficiencies or 30 calendar days for all other HQS deficiencies. Condition During the audit we noted one failed inspection was not followed up prior to the 30 day requirement Cause The Authority?s controls over failed inspections were not followed. Repeat Finding No Effect The Authority could not determine if the HQS deficiency was corrected in a timely manner. Recommendation We recommend that management review their controls over inspections to ensure they are implemented. Views of Responsible Official The Authority agrees with the finding.

Finding 2021-002 ? Housing Voucher Cluster, CFDA No. 14.871 and 14.879 ? Reporting Criteria Pursuant to 24 CFR 982.158, the Authority must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements. HUD uses HUD-52681-B, Voucher for Payment of Annual Contributions and Operation Statement, via the Voucher Management System (VMS) to monitor the Authority?s Housing Choice Voucher program financial and operational performance. Condition During the audit we noted reporting issues in reporting the Authority?s restricted net position via the VMS. Activity related to the Mainstream grant were not included in the total. Cause The Authority does not have adequate levels of controls in place over reviewing reports. Repeat Finding No Effect The Authority reported inaccurate information to HUD. Recommendation We recommend that management have more procedures in place to effectively reconcile, review, and submit required reports to HUD. Views of Responsible Official The Authority agrees with the finding.