Evansdale Municipal Housing AuthorityLocal Government

Finding 2024-004: Activities Allowed Housing Choice Voucher Program – 14.871 Material Weakness/Noncompliance – Activities Allowed Repeat Finding 2023-006 Criteria: In the Housing Choice Voucher program, the transfers of HAP, and associated administrative fees, even temporarily, to support another program or use are not allowed and could be considered a breach of the annual contributions contract. The Authority should further have documented internal control procedures in place to ensure all cost incurred are allowable such as budgetary controls and Board member review of the actual expenses. Condition: The Authority transitioned from the Public Housing program paying all the bills to the Housing Choice Voucher program paying all of the operating expenses of the Authority after the Public Housing properties were disposed to Green Roof Properties. The expenses are allocated on the general ledgers between all programs which creates interfund receivable/payable balances. It was noted in the prior year audit the Authority did not have a system in place to reimburse these funds timely. We noted at June 30, 2024, the Housing Choice Voucher program was owed $25,469.20 from Green Roof Properties as the Authority did not have a system in place to reimburse shared expenses monthly. An important element of the internal control structure is for the Authority to adopt an operating budget for the Housing Choice Voucher program. This sets the expected expense levels for the program with the goal of maintaining financial viability and assists in identifying errors. The Authority should have procedures in place to compare actual results to the budget and take action as necessary. We noted the Authority did not have an operating budget for the Housing Choice Voucher program for the year ending June 30, 2024 and has not adopted a budget for the program as of June 30, 2025 as of the audit fieldwork date. We further noted there was not documented review of the expenses in the Housing Choice Program although expenses are approved as a whole in the Board minutes. Due to the limited staff size of the Authority, documented oversight is important to ensure all costs incurred are allowable. The Authority indicated in its Summary Schedule of Prior Audit Findings that the finding was corrected. Cause: The Authority has not adequately reviewed and adopted internal control procedures over allowable costs. Effect or Potential Effect: The Authority was in noncompliance with the regulations regarding temporary loans to other Authority programs and does not have adequate documented controls over allowable costs. Recommendation: The Authority should adopt procedures to reimburse shared expenses timely. The Authority should also establish internal controls and procedures to adopt an operating budget annually for the Voucher program. The operating budget should included with its monthly financial reports for a comparison of actual to budgeted figures. Further, the Authority should review and adopt internal controls and procedures to ensure all costs incurred by the Housing Choice Voucher program are allowable. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.

Finding 2024-005: Financial Data Schedule Housing Choice Voucher – 14.871 Material Weakness/Noncompliance - Reporting Criteria: Financial Assessment Sub¬system, FASS-PH. The Uniform Financial Reporting Standards (24 CFR section 5.801) require PHAs to submit timely GAAP-based unaudited and audited financial information electronically to HUD. The unaudited submission is due 60 days after the fiscal year end. Condition: The Authority’s unaudited submission was due August 30, 2024 and was not submitted until September 30, 2024. Cause: The Authority utilizes a fee accountant to perform this function on its behalf. The monthly accounting during the year was behind and did not allow for the Authority to complete the unaudited submission by the deadline. Effect or Potential Effect: The Authority was in noncompliance with filing its unaudited information to REAC by the deadline.   Recommendation: The Authority should make an effort to have timely monthly financial reports which would allow it to be able to close its year end in a more timely fashion and would allow for the Authority to report to REAC by the deadline. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.

Finding 2023-004: Internal Control Structure Housing Choice Voucher, 14.871 Material Weakness – Eligibility, Reporting and Special Tests and Provisions Criteria: The Authority is responsible for establishing an effective internal control process to ensure the Authority complies with the requirements governing the Housing Choice Voucher program. Condition: The Authority has one employee that is responsible for the Housing Choice Voucher program tenant files which include income, deduction and HAP calculations, reporting and special tests and provisions such as rent reasonableness. The Authority has not establish controls such as documented supervisory reviews which could be used to detect and prevent errors or noncompliance. Cause: The Authority has not evaluated the risks related to errors or noncompliance and established internal control procedures the would prevent and detect errors and noncompliance.   Effect or Potential Effect: The control deficiencies are deficiencies that result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected Recommendation: The Authority should review its procedures and establish control procedures to ensure compliance with Housing Choice Voucher rules and regulations. The control procedures should be documented. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding but can not reasonably adopt internal control procedures to correct the material weakness.

Finding 2023-005: Deposit Collateralization Housing Choice Voucher Program – 14.871 Material Weakness/Noncompliance – Special Tests and Provisions Repeat Finding 2022-003 Criteria: The Authority is required to enter into a current depository agreement with its financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third-party rights to HUD. Condition: The Authority did have a HUD depository agreement with its bank but the form was the 1991 version and not the current version required by HUD. Cause: The Authority was not monitoring to ensure it had the current depository agreement Effect or Potential Effect: The Authority was in noncompliance with HUD’s requirement to have proper depository agreements. Recommendation: The Authority should obtain a current depository agreement with its bank and monitor to ensure it stays up-to-date with the form for any new versions. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.

Finding 2023-006: Allowable Costs Housing Choice Voucher Program – 14.871, Public Housing – 14.850 Material Weakness/Noncompliance – Allowable Costs Criteria: In the Public Housing program, transfers out of the operating fund can only occur in very limited circumstances. This would preclude the Authority from using operating funds to provide temporary loans to programs with the Authority. Interfund transactions indicate the existence of temporary loans. In the Housing Choice Voucher program, the transfers of HAP, and associated administrative fees, even temporarily, to support another program or use are not allowed and could be considered a breach of the annual contributions contract. Condition: The Authority’s Public Housing program pays all of the operating expenses of the Authority and the expenses are allocated between both the Public Housing and Voucher programs. At June 30, 2022, the Voucher program had a receivable of $49,694.77 from Public Housing as it appeared the Voucher program had over-reimbursed Public Housing. During the year ending June 30, 2023, the expenses were correctly allocated to the Voucher program but no reimbursements occurred which resulted in the Voucher program now owing Public Housing $62,486.09 at June 30, 2023, a change of $112,180.86. We further noted the Authority did not have procedures to adopt an operating budget for the Voucher program as a control to device to ensure operating costs were reasonable and the program remains financially viable. Cause: The Authority did not have a system in place to reimburse shared expenses timely and the Authority was not monitoring the balances. Effect or Potential Effect: The Authority was in noncompliance with the regulations regarding temporary loans to other Authority programs. Recommendation: The large interfund balance was brought to the Authority’s attention by its fee accountant and $59,627.35 was paid from Voucher to Public Housing on July 7, 2023. The Authority should reimburse the remainder of the balance and establish procedures to reimburse shared expenses timely. The Authority should also establish procedures to adopt an operating budget annually for the Voucher program. The operating budget should included with its monthly financial reports for a comparison of actual to budgeted figures. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding but can not reasonably adopt internal control procedures to correct the material weakness.