Goldenrod Regional Housing AgencyLocal Government

Finding 2024-004: Allowable Activities Housing Choice Voucher – 14.871 Material Weakness/Noncompliance – Activities Allowed or Unallowed Questioned Costs: $7,101.65 Repeat Finding 2023-004 Criteria: In the Housing Choice Voucher program, accumulated administrative fees post fiscal year 2003 may only be used to support the Housing Choice Voucher program. Further, 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 Agency shares one checking account for which all bills are paid from and expenses are allocated between the Housing Choice Voucher program and the Management program. The Management program had a decrease in its unrestricted net position of $2,726.03 during the fiscal year ending September 30, 2024 which left a deficit balance of $7,534.93. The Management program owed the Voucher program $7,101.65 and as a result of the deficit unrestricted net position, is unable to repay the funds. Further, the Agency ended providing management services after September 30, 2024 and the program will no longer have a revenue stream and will be unable to repay the funds due to the Voucher program from future revenues. Cause: The Agency was not adequately monitoring its financial condition. Effect or Potential Effect: The Housing Choice Voucher program funded the Management programs losses and related deficit. Recommendation: The Agency should review with HUD on how to handle this issue. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.

Finding 2023-004: Allowable Activities Housing Choice Voucher – 14.871 Material Weakness/Noncompliance – Activities Allowed or Unallowed Questioned Costs: $4,808.90 Criteria: In the Housing Choice Voucher program, accumulated administrative fees post fiscal year 2003 may only be used to support the Housing Choice Voucher program. Further, 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 Agency shares one checking account for which all bills are paid from and expenses are allocated between the Housing Choice Voucher program and the Management program. The Management program had a decrease in its unrestricted net position of $3,082.66 during the fiscal year ending September 30, 2022 which left a balance of $580.05. During the year ending September 30, 2023, unrestricted net position decreased $5,388.95 and now has a deficit balance of $4,808.90. The deficit means the Management program used Housing Choice Voucher funds to cover its expenses. The revenue source for the Management program is limited and the management fee it earns is established by USDA Rural Development as it is providing management services to Rural Rental Housing programs so any significant increase in revenue is not likely. Significant expenses would need to be cut in the Management program to make the program profitable for the deficit unrestricted net position to be funded. Cause: The Agency is not adequately monitoring its financial condition. The Agency utilizes a single general ledger to account for all of the Agency’s activities but each programs activities are accounted for in a unique account number so the Housing Choice Voucher program and Management program are not comingled into one account. However, the monthly income statement generated has all the activity listed together and does show a separate bottom line for both programs and does not allow the Agency to monitor each program separately. Effect or Potential Effect: The Housing Choice Voucher program is funding the Management programs losses and related deficit. Recommendation: The Agency should review with its fee accountant to see if a new income statement report could be generated to show each program individually. If this is not possible, the Agency should consider having separate general ledgers maintained for each program. Doing this would allow the Agency to see each programs financial condition monthly. The Agency should review areas to cut costs as both programs are losing money. The Agency must maintain a system of fairly allocating expenses between each program. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.

Finding 2021-003: Depository Agreements Assistance Listing 14.871 Material Weakness\Noncompliance Criteria: The Agency is required to enter into depository agreements 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. They further required deposits that are not insurance to be collateralized by allowable criteria defined by HUD. Condition: The Agency did in fact have a signed depository agreement but it was the 1991 version of the form and that bank name on the form was not the current bank?s current name. Cause: The Agency was not monitoring the requirement to ensure a current version of the form was used that bank?s current name matched what was included on the form. Effect or Potential Effect: The Agency was in noncompliance with HUD?s requirement to have proper depository agreements. Recommendation: The Agency should contact its financial institutions and have them sign the appropriate depository agreement and follow the terms which includes proper collateralization View of the Responsible Officials of the Auditee: The auditee?s management agrees with the finding.