HOUSING AUTHORITY OF NEWBERRY

2025-001 ALN 14.871 – Housing Voucher Cluster – Eligibility Condition and Criteria: During our audit, it was determined that significant deficiencies in internal controls existed over the Authority’s Housing Voucher Cluster eligibility process being compliant with HUD regulatory requirements. Housing Assistance payments on 50058 reports should agree to the corresponding HAP register. EIV reports should be ran at least once annually and ran within 120 days for new admissions. Utility allowances reported on the 50058 reports should agree to the Authority's utility allowance calculated sheets. Support for income, expenses, and deductions should be maintained in the tenant file. HQS inspections should be performed in accordance with the Authority's policies. Housing Assistance payments on 50058 reports did not agree to the corresponding HAP register. EIV reports were not ran at least once annually and ran within 120 days for new admissions. Utility allowances reported on the 50058 reports did not agree to the Authority's utility allowance calculated sheets. Support for income, expenses, and deductions were not maintained in the tenant files. HQS inspections were not performed in accordance with the Authority's policies. Amount of Questioned Costs: None Context: Within the 25 tenant files selected and tested for compliance with laws and regulations, 1 of the tenant files tested did not have an EIV report, 1 of the tenant files tested were missing a signed Declaration of Section 214 Status, 2 tenant files tested did not have the requested copy of HUD-50058 due to late recertifications, 1 tenant file tested had an incorrect utility allowance used, 1 tenant files has incorrect income reported, 1 HQS inspection was not performed in accordance with the Authority's policies, and 1 tenant file with an incorrect payment standard. The Authority under prior management did not utilize adequate internal controls over the HCV program as there is a lack of sufficient documentation that was evident in the prior year and continued over to the current audit period. Cause: The Authority under prior management did not utilize adequate internal controls over the HCV program as there is a lack of sufficient documentation that was evident in the prior year and continued over to the current audit period. 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 is maintained per Federal regulations and the Authority's Section 8 Administrative Plan. 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: The Executive Director agrees with the finding and will follow the Auditor's recommendation.

2025-001 ALN 14.871 – Housing Voucher Cluster – Eligibility Management acknowledges the finding and will follow the Auditor's recommendations as listed in the Schedule of Findings and Questioned Costs. Person Responsible for Correction of Finding: Jessica Holcomb, Executive Director Projected Completion Date: December 31, 2026

2024-001

2024-001 ALN 14.871 – Housing Voucher Cluster – Eligibility Condition and Criteria: During our audit, it was determined that significant deficiencies in internal controls existed over the Authority’s Housing Voucher Cluster eligibility process being compliant with HUD regulatory requirements. Housing Assistance payments on 50058 reports should agree to the corresponding HAP register. EIV reports should be ran at least once annually and ran within 120 days for new admissions. Utility allowances reported on the 50058 reports should agree to the Authority's utility allowance calculated sheets. Housing Assistance Payment Contracts should be maintained in the tenant file. HUD form 9886 should be maintained in the tenant file and signed by the tenant annually. Support for income, expenses, and deductions should be maintained in the tenant file. Rent reasonableness determinations should be performed for new admissions. HQS inspections should be performed in accordance with the Authority's policies. Housing Assistance payments on 50058 reports did not agree to the corresponding HAP register. EIV reports were not ran at least once annually and ran within 120 days for new admissions. Utility allowances reported on the 50058 reports did not agree to the Authority's utility allowance calculated sheets. Housing Assistance Payment Contracts were not maintained in the tenant file. HUD form 9886 was not maintained in the tenant files and signed by the tenant annually. Support for income, expenses, and deductions were not maintained in the tenant files. Rent reasonableness determinations were not performed for new admissions. HQS inspections were not performed in accordance with the Authority's policies. Amount of Questioned Costs: None Context: Of the 20 tenant files tested for eligibility, we noted the following exceptions: • 2/20 Housing Assistance payments on 50058 reports did not agree to the corresponding HAP register. • 15/20 EIV reports were not ran at least once annually and ran within 120 days for new admissions. • 12/20 Utility allowances reported on the 50058 reports did not agree to the Authority's utility allowance calculated sheets. • 14/20 Housing Assistance Payment Contracts were not maintained in the tenant file. • 3/20 HUD form 9886 was not maintained in the tenant files and signed by the tenant annually. • 4/20 Support for income, expenses, and deductions were not maintained in the tenant files. • 4/20 Rent reasonableness determinations were not performed for new admissions. • 5/20 HQS inspections were not performed in accordance with the Authority's policies. • 1/20 The Authority was unable to provide any documentation from the tenant file Cause: The Authority under prior management did not utilize adequate internal controls over the HCV program as there is a lack of sufficient documentation that was evident in the prior year and continued over to the current audit period. Effect: Adequate supporting documentation was not maintained in the file. Auditor’s Recommendation: We recommend the Authority implement controls to address all the exceptions noted above. This includes reconciling 50058 reports to HAP registers, reminders to run EIV reports when necessary, reconciling 50058 reports to utility allowance calculation sheets, maintaining HAP contracts, signed HUD 9886 forms, and support for income, expenses, and deductions in the tenant file, and performing rent reasonableness determinations and HQS inspections when necessary/required. Grantee Response: The Executive Director agrees with the finding and will follow the Auditor's recommendation

2024-001 ALN 14.871 – Housing Voucher Cluster – Eligibility Management acknowledges the finding and will follow the Auditor's recommendations as listed in the Schedule of Findings and Questioned Costs. Person Responsible for Correction of Finding: Jessica Holcomb, Executive Director Projected Completion Date: December 31, 2025

2023-004

2024-002 ALN 14.850 – Public Housing Operating Fund – Eligibility Condition and Criteria: During our audit, it was determined that significant deficiencies in internal controls existed over the Authority’s Public Housing Operating Fund Program eligibility process being compliant with HUD regulatory requirements. EIV reports should be ran within 120 days of move-in for new admissions to the program. An EIV report should be ran and maintained in the tenant's file at least once annually in order to meet HUD's documentation requirements. The Authority must document in the file that tenants were offered the choice of flat rent or income-based rent. The Authority did not maintain EIV reports in the tenant files. Therefore, no evidence of the EIV report being ran exists. The Authority's internal controls failed to identify one tenant that did not have an offer of flat rent versus income-based rent documented in the file. Amount of Questioned Costs: None Context: Of the 20 tenant files tested for eligibility, evidence of the EIV report being ran within 120 days of move-in date for the one of the new admissions tested was not present. In addition, 5 tenant files did not have evidence of an EIV report being ran at least once annually. In addition, one tenant file tested did not have an offer of flat rent versus income-based rent documented in the file. Cause: The Authority did not utilize adequate internal controls under prior management over the Public Housing Operating Fund program as there is a lack of sufficient documentation. Effect: Adequate supporting documentation was not maintained in the file. Auditor’s Recommendation: We recommend the Authority implement controls to run the EIV report within 120 days of move-in for new admissions and at least once annually for all other tenants. The Authority needs to maintain these EIV reports in the tenant files. The Authority should utilize effective controls to ensure relevant documentation is maintained in the Public Housing Operating Fund program tenant files. Grantee Response: The Executive Director agrees with the finding and will follow the Auditor's recommendation.

2024-002 ALN 14.850 – Public Housing Operating Fund – Eligibility Management acknowledges the finding and will follow the Auditor's recommendations as listed in the Schedule of Findings and Questioned Costs. Person Responsible for Correction of Finding: Jessica Holcomb, Executive Director Projected Completion Date: December 31, 2025

2023-003

2023-002 ALN 14.850 - Public & Indian Housing Program - Allowable Activities - Use of Operating Funds for Capital Improvements Condition and Criteria: According to the U.S. Department of Housing and Urban Development (HUD) regulations, specifically 24 CFR Part 990, public housing agencies (PHAs) are permitted to use up to 20% of their operating funds for capital improvements. Expenditures more than this threshold must be specifically approved by HUD. During our audit, it was noted that the PHA utilized $384,080 of its operating funds for capital improvements. This amount represents 28% of the total operating funds received, exceeding the 20% threshold allowed without prior HUD approval. Amount of Questioned Costs: The amount of questioned costs is $113,334, which represents an excess of the 20% allowable threshold. Context: The Authority received $1,353,732 in Operating funds during the audit period, resulting in a threshold of up to $270,746 to be allowed for the use of capital improvements. $384,080 of the Authority’s operating funds were used for capital improvements, which is in excess of the threshold by $113,334. Cause: The cause of this non-compliance was a lack of adequate internal controls from prior management to monitor the percentage of operating funds being allocated for capital improvements. The PHA did not have a system in place to ensure that expenditure for capital improvements did not exceed the allowable 20% threshold. Effect: As a result, the PHA was not in compliance with HUD regulations, which may result in questioned costs and the potential for required repayment of the funds used inappropriately. Auditor’s Recommendation: We recommend that the PHA implement stronger internal controls to monitor the use of operating funds for capital improvements. Specifically, the PHA should establish procedures to track the percentage of operating funds allocated for capital improvements and ensure compliance with the 20% threshold. Additionally, the PHA should seek retroactive approval from HUD for the excess funds used or take appropriate steps to reclassify or repay the questioned costs. Grantee Response: The Executive Director agrees with the finding and will follow the Auditor's recommendation.

2023-002 ALN 14.850 - Public & Indian Housing Program - Allowable Activities - Use of Operating Funds for Capital Improvements Management acknowledges the finding and will follow the Auditor's recommendations as listed in the Schedule of Findings and Questioned Costs. Person Responsible for Correction of Finding: Jessica Holcomb, Executive Director Projected Completion Date: December 31, 2024

2023-003 ALN 14.850 - Public & Indian Housing Program - Eligibility Condition and Criteria: During our audit, it was determined that significant deficiencies in internal controls existed over the Authority’s Public & Indian Housing Program eligibility process being compliant with HUD regulatory requirements. EIV reports should be run within 120 days of move-in for new admissions to the program. An EIV report should be run and maintained in the tenant's file at least once annually to meet HUD's documentation requirements. HUD form 9886 needs to be signed annually by the tenants. Rent must be properly calculated or agreed to the Authority's flat rent schedule. The Authority did not maintain EIV reports in the tenant files. Therefore, no evidence of the EIV report being run exists and support for tenants with Social Security income was insufficient. The Authority's internal controls failed to identify one tenant that did not have an executed HUD form 9886 in the file and one tenant that did not have the correct amount of rent calculated. Amount of Questioned Costs: None Context: Of the 20 tenant files tested for eligibility, evidence of the EIV report being ran within 120 days of move-in date for the three new admissions tested was not present. In addition, 7 tenant files did not have evidence of an EIV report being ran at least once annually. In addition, one tenant file tested did not have an executed HUD form 9886 in the file. One tenant's flat rent amount was listed as $206, which did not agree to the Authority's flat rent schedule or any possible calculation for rent. Cause: The Authority did not utilize adequate internal controls over the Public & Indian Housing program as there is a lack of sufficient documentation. The staff under prior management was under the impression that once the EIV report is run, it should be destroyed and not stored in the file. Effect: Adequate supporting documentation was not maintained in the file and income was not adequately supported by the documentation. Auditor’s Recommendation: We recommend the Authority implement controls to run the EIV report within 120 days of move-in for new admissions and at least once annually for all other tenants. The Authority needs to maintain these EIV reports in the tenant files. The Authority should utilize effective controls to ensure relevant documentation is maintained in the Public & Indian Housing program tenant files. Grantee Response: The Executive Director agrees with the finding and will follow the Auditor's recommendation.

2023-003 ALN 14.850 - Public & Indian Housing Program - Eligibility Management acknowledges the finding and will follow the Auditor's recommendations as listed in the Schedule of Findings and Questioned Costs. Person Responsible for Correction of Finding: Jessica Holcomb, Executive Director Projected Completion Date: December 31, 2024

2023-004 ALN 14.871 – Housing Voucher Cluster – Eligibility Condition and Criteria: During our audit, it was determined that significant deficiencies in internal controls existed over the Authority’s Housing Voucher Cluster eligibility process being compliant with HUD regulatory requirements. EIV reports should be run within 120 days of move-in for new admissions to the program. An EIV report should be run and maintained in the tenant's file at least once annually to meet HUD's documentation requirements and to evidence support of tenants' social security income. The Authority did not maintain EIV reports in the tenant files. Therefore, no evidence of the EIV report being run exists and support for tenants with Social Security income was insufficient. Amount of Questioned Costs: None Context: Of the 20 tenant files tested for eligibility, evidence of the EIV report being ran within 120 days of move-in date for the three new admissions tested was not present. In addition, 14 tenant files did not have evidence of an EIV report being ran at least once annually. In addition, H&P was unable to verify social security income for 5 tenants as there were no EIV reports, or social security letters present in the file. Cause: The Authority did not utilize adequate internal controls over the HCV program as there is a lack of sufficient documentation. The staff under prior management was under the impression that once the report is ran, it should be destroyed and not stored in the file. Effect: Adequate supporting documentation was not maintained in the file and income was not adequately supported by the documentation. Auditor’s Recommendation: We recommend the Authority implement controls to run the EIV report within 120 days of move-in for new admissions and at least once annually for all other tenants. The Authority needs to maintain these EIV reports in the tenant files. The Authority should utilize effective controls to ensure relevant documentation is maintained in the HCV program tenant files. Grantee Response: The Executive Director agrees with the finding and will follow the Auditor's recommendation.

2023-004 ALN 14.871 – Housing Voucher Cluster – Eligibility Management acknowledges the finding and will follow the Auditor's recommendations as listed in the Schedule of Findings and Questioned Costs. Person Responsible for Correction of Finding: Jessica Holcomb, Executive Director Projected Completion Date: December 31, 2024

2023-006 ALN 14.872 - Capital Funds Program - Special Tests - Environmental Reviews Condition and Criteria: According to HUD regulations, specifically 24 CFR Part 58, PHAs are required to conduct environmental reviews for projects funded under the Capital Fund Program. These reviews ensure that the projects comply with the National Environmental Policy Act (NEPA) and other related federal environmental laws and authorities. Certain activities may be categorically excluded from NEPA, but documentation supporting these exclusions must be maintained. During our audit, the PHA was unable to provide the environmental reviews or documentation supporting categorically excluded activities for CFP 501-21 and 501-22 grants during the audit period. There was no evidence that required environmental assessments or justifications for categorical exclusions were completed and retained. Amount of Questioned Costs: None Context: The Authority was unable to provide the environmental reviews or documentation supporting categorically excluded activities for CFP 501-21 and 501-22 grants during the audit period. Cause: The cause of this non-compliance appears to be inadequate oversight and internal controls under prior management regarding the environmental review process. The PHA did not have established procedures to ensure that environmental reviews were conducted and properly documented for all applicable projects. Effect: As a result, the PHA was not in compliance with HUD’s environmental review requirements. This non-compliance could result in projects being implemented without proper environmental safeguards, potentially leading to negative environmental impacts and jeopardizing federal funding. Auditor’s Recommendation: We recommend that the PHA implement procedures to ensure that all required environmental reviews are conducted and documented in accordance with 24 CFR Part 58. This includes maintaining a record of environmental assessments, justifications for categorical exclusions, and any other related documentation. Additionally, the PHA should provide training for staff responsible for overseeing the environmental review process to ensure compliance with federal requirements. Grantee Response: The Executive Director agrees with the finding and will follow the Auditor's recommendation.

2023-006 ALN 14.872 - Capital Funds Program - Special Tests - Environmental Reviews Management acknowledges the finding and will follow the Auditor's recommendations as listed in the Schedule of Findings and Questioned Costs. Person Responsible for Correction of Finding: Jessica Holcomb, Executive Director Projected Completion Date: December 31, 2024