Roxboro Housing Authority

2024-003 ALN 14.850 – Public Housing Operating Fund – Eligibility Condition and Criteria: In accordance with HUD eligibility requirements set forth in 24 CFR § 5, subpart F and § 960.259, the Authority is required to obtain the necessary information, documentation, and releases for the Authority to verify income eligibility. The Authority is also required to obtain and document third party verification of annual income, the value of assets, expenses related to deductions, and other factors that affect the determination of adjusted income or income-based rent, and then properly calculate the tenant's rent payment using this documentation. It is then required to accurately complete the tenant's form HUD-50058 report at least every 12 months and maintain these reports in the tenant files. During our audit, it was determined that significant deficiencies in internal controls existed over the Authority’s Public Housing Operating Fund program process of maintaining required documentation in tenant files per HUD regulatory requirements. The Authority’s personnel responsible for eligibility determination procedures were not properly filing annual and interim recertification's form HUD-50058 in tenant files. Amount of Questioned Costs: None. Context: Within the 25 tenant files selected and tested for compliance with laws and regulations, 7 of these tenant files did not either have an EIV report, signed Declaration of Section 214 Status, or did not have adequate 3rd party support for income Cause: The Authority did not have adequate internal controls in place over monitoring required documentation in tenant files and the retention of annual and interim re-certifications for Public Housing tenants. Effect: The Authority is not in compliance with HUD requirements over documentation in tenant files. The Authority potentially could be improperly performing annual and interim reexaminations. This could cause some of the tenants to pay an incorrect rent amount in accordance with HUD eligibility rules and regulations. Auditor’s Recommendation: We recommend that the Authority review documentation requirements regarding tenant files. We recommend the Authority implement adequate processes and procedures to ensure all required tenant files documentation per 24 CFR § 5, subpart F and § 960.259 is maintained. The Authority should also begin performing quality control procedures including internal audits of tenant files to ensure that these files are accurate and complete. Grantee Response: Current management acknowledges the finding and is following the auditor’s recommendations.

2024-004 ALN 14.850 – Public Housing Operating Fund – Special Test - Depository Agreements Condition and Criteria: In accordance with the Annual Contributions Contract (ACC) and supporting HUD regulations like 24 CFR, part 990, Public Housing Authorities are required to maintain depository agreements (HUD-51999) with financial institutions that hold their funds. During our audit, it was determined that the Authority was unable to locate depository agreements with the two financial institutions that hold their funds. Amount of Questioned Costs: None Context: The Authority was unable to locate depository agreements with the two financial institutions that hold their funds. Cause: Due to recent personnel changes, the Authority's current management was unable to successfully locate Form HUD-51999 with the financial institutions that hold their funds. Effect or Potential Effect: Depository agreements include provisions ensuring that the deposited funds are secured or collateralized. The lack of depository agreements could result in improper collateralization of HUD funds. Auditor’s Recommendation: We recommend that the Authority's management take the necessary steps to obtain depository agreements from the two financial institutions that hold their funds. We also recommend that the Authority implement internal controls to detect when required HUD documentation is not present. Grantee Response: Current management acknowledges the finding and is following the auditor’s recommendations.

2024-005 ALN 14.850 – Public Housing Operating Fund – Special Test – Public Housing Utility Operating Fund Requirements Condition and Criteria: Per 24 CFR § 990.170, a Public Housing Agency (PHA) must calculate Utilities Expense Level (UEL) based on its consumption for each utility, the applicable rates for each utility, and an applicable inflation factor. The UEL for a given funding period is the product of the utility rate multiplied by the payable consumption level multiplied by the inflation factor. The UEL is expressed in terms of Per Unit Month (PUM) costs. The utility rate for each type of utility will be the actual average rate from the most recent 12-month period that ended June 30th prior to the beginning of the applicable funding period. The rate will be calculated by dividing the actual utility cost by the actual utility consumption, with consideration for pass-through costs (e.g., state and local utility taxes, tariffs) for the time period specified in this paragraph. During our testing of HUD forms 52722 and 52723 (Calculation of Operating Subsidy), PHA failed to provide the HUD forms in current year. Amount of Questioned Costs: None Context: The Authority was unable to locate HUD forms 52722 and 52723. Cause: The Authority’s internal controls over the PHOF Operating Subsidy calculation process that were in place lacked the necessary controls over monitoring of related HUD regulatory requirements. Effect or Potential Effect: The Authority could be receiving subsidy amounts that are smaller than the Authority needs to operate on an annual basis. The Authority may not detect errors to the calculation of operating subsidy and utilities expense level in a timely manner. Auditor’s Recommendation: We recommend that the Authority's management take the necessary steps to obtain forms 52722 and 52723. We also recommend that the Authority implement internal controls to detect when required HUD documentation is not present. Grantee Response: Current management acknowledges the finding and is following the auditor’s recommendations.

2024-006 ALN 14.850 – Public Housing Operating Fund – Special Test – UEL Formula Condition and Criteria: Per 24 CFR § 990.170, a Public Housing Agency (PHA) must calculate Utilities Expense Level (UEL) based on its consumption for each utility, the applicable rates for each utility, and an applicable inflation factor. The UEL for a given funding period is the product of the utility rate multiplied by the payable consumption level multiplied by the inflation factor. The UEL is expressed in terms of Per Unit Month (PUM) costs. The utility rate for each type of utility will be the actual average rate from the most recent 12-month period that ended June 30th prior to the beginning of the applicable funding period. The rate will be calculated by dividing the actual utility cost by the actual utility consumption, with consideration for pass-through costs (e.g., state and local utility taxes, tariffs) for the time period specified in this paragraph. During our testing of HUD forms 52722 and 52723 (Calculation of Utilities Expense Level), PHA failed to provide the HUD forms in current year. Amount of Questioned Costs: None Context: The Authority was unable to locate HUD forms 52722 and 52723. Cause: The Authority’s internal controls over the PHOF Utilities Expense Level calculation process that were in place lacked the necessary controls over monitoring of related HUD regulatory requirements. Effect or Potential Effect: The Authority could be receiving subsidy amounts that are smaller than the Authority needs to operate on an annual basis. The Authority may not detect errors to the calculation of operating subsidy and utilities expense level in a timely manner. Auditor’s Recommendation: We recommend that the Authority's management take the necessary steps to obtain forms 52722 and 52723. We also recommend that the Authority implement internal controls to detect when required HUD documentation is not present. Grantee Response: Current management acknowledges the finding and is following the auditor’s recommendations.

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