Housing Authority of the City of Independence

2024-001 INTERPROGRAM DUE TO/DUE FROM ACTIVITIES Questioned Costs None Criteria According to PHA Accounting Brief #14 Due To/Due From relationships should not be reported under accrual accounting simply from the result of a PHA using a common checking or working capital account. Because of the basic nature of most Federal and state programs, resources from one program cannot be used to support the costs of another program. HUD views Due To’s and Due From’s reported in a PHA’s Federal programs as possible indicators of non-compliance. Condition The Authority has interfund receivables and payables that have not been repaid as of fiscal year end. Context The Authority reported a material ($505,884 in total, $478,661in HCV program) amount of interfund receivables and payables, which is a significant red flag for HUD reviewers. Cause The Authority was not effectively monitoring and managing interfund program balances in order to ensure that programs were not spending funds that they do not have. Effect The use of Due to/ Due From transactions reported in the Authority's financials, which could signify to HUD that one or more programs have used resources to cover the costs of another program. Recommendations The Housing Authority should expand it's controls over cash reconciliations to include a step to verify if a program, fund or component unit is accurate along with the entire cash pool. Also interfund should be repaid monthly at a minimum. Management Views Management agrees with the finding, see Management's corrective action plan.

Independence Housing Authority (IHA) received an audit finding for failing to clear Interprogram Due To/Due From Activities from the financials at fiscal year-end. In order to remedy the situation, IHA has revised its internal monthly checklist to ensure that interfund transfers are cleared on a monthly basis to prevent the accumulation of interfund receivables and payables. IHA will also strengthen its cash management practices by reviewing and reconciling inter-program balances on a monthly basis. This process will include a detailed review to ensure that program-level cash components are accurate, and resources are being used exclusively for their intended purposes.

2024-002 Utilities Allowance Calcuation Questioned Costs None Criteria "In accordance with the 2014 Appropriations Act Section 242, the utility allowance for a family shall be the lower of: (1) The utility allowance amount for the family unit size; or (2) the utility allowance amount for the unit size of the unit rented by the family. However, upon the request of a family that includes a person with disabilities, the PHA must approve a utility allowance higher than the applicable amount if such a higher utility allowance is needed as a reasonable accommodation in accordance with HUD's regulations in 24 CFR part 8 to make the program accessible to and usable by the family member with a disability. This provision applies only to vouchers issued after the effective date of this notice (June 12, 2014) and to current program participants. For current program participants, a PHA must implement the new allowance at the family's next annual reexamination, provided that the PHA is able to provide a family with at least 60 days' notice prior to the reexamination. " Condition During the audit, we noted multiple HUD Forms 50058 had utility allowances calculated not in accordance with the above criteria. Context The Authority had roughly 1,490 vouchers issued throughout the fiscal year under examination which would translate to 17,890 housing assistance payment transactions for the year. Of these we reviewed 40 individual housing assistance payment transactions, and found 2 instances of noncompliance. Cause Personnel responsible for calculating the utility allowances were not informed of requirements and no internal controls were in place to ensure compliance. Effect The Authority was in violation of the Federal Regulation which resulted in errors in calculating housing assistance payments (HAP) and utility reimbursement payments. Recommendations We recommend that Management implement procedures to ensure compliance with the above regulations as it relates to the Section 8 Housing Choice Voucher Program. Management Views Management agrees with the finding, see Management's corrective action plan.

Independence Housing Authority (IHA) also received an audit finding for failing to calculate the utility allowances correctly. This was caused by previous management instructing staff to provide an appliance credit to all tenants at move-in. All staff members have been retrained in the proper procedures for calculations and allowances. All HCV program specialists have received rent calculations certifications and have been instructed to correct any prior errors immediately. The Compliance Officer is also doing random tenant file audits on a monthly basis. This should make finding

2024-003 Significant Deficiency - Special Tests (N) - HQS Inspections Questioned Costs None Criteria "The PHA must inspect the unit leased to a family at least bi-annually to determine if the unit meets Housing Quality Standards (HQS) and the PHA must conduct quality control re‐inspections. The PHA must prepare a unit inspection report (24 CFR §§982.405, 983.103). " Condition During our audit, we noted multiple instances where failed HQS inspections did not have the proper support for the failed HQS inspection. Therefore, the Authority falls out of the HQS inspection compliance as noted in the Uniform Guidance Part IV HUD 14.871. Context We selected a sample of 23 failed inspections that occurred during the fiscal year. Out of the 23 samples selected, 4 of those lacked the proper documentation of a follow up passed inspection. Cause Controls over compliance associated with the Authority’s grants of federal funds are inadequate. Effect The Authority is non‐compliant with the federal regulations over this federal program, this could potentially result in significant operating and financial penalties. Recommendations We suggest the Authority structure a system capable of properly overseeing compliance with regulations relative to these grants as well as maintaining more accurate and complete documentation of adherence to compliance. Management Views Management agrees and has a corrective plan detailing the course of action to be taken in the next fiscal year.

Independence Housing Authority (IHA) received an audit finding for failing to properly document the reinspection of a failed HQS inspection. During the previous year, IHA had 3 contractors inspecting for HCV and not using the internal software which led to multiple issues including missing documentation. IHA hired a full time, HQS/NSPIRE certified inspector in August 2023 to ensure HQS inspections are completed in a timely manner and within regulation. IHA has also purchased the BOB.AI software which monitors and schedules upcoming initial, reinspection’s, annual and special inspection requests. Inspection letters are generated in this program as well as results/finding items. Inspections spreadsheets have been created for tracking purposes by the HCV Director. The inspector reviews his weekly schedule with the HCV Director for accuracy.

2023-001