Housing and Community Redevelopment Authority of Marlboro CountyLocal Government

"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. During the audit, we noted multiple HUD Forms 50058 had utility allowances calculated not in accordance with the above criteria. The Authority had roughly 277 vouchers issued throughout the fiscal year under examination which would translate to 3,324 housing assistance payment transactions for the year. Of these we reviewed 40 individual housing assistance payment transactions, and found 13 instances of noncompliance. Personnel responsible for calculating the utility allowances were not informed of requirements and no internal controls were in place to ensure compliance. The Authority was in violation of the Federal Regulation which resulted in errors in calculating housing assistance payments (HAP) and utility reimbursement payments.

Finding Number 2024-001: Inaccessibility of Accounting Records Condition: During the performance of the audit the Authority was unable to provide timely access to key accounting records necessary to verify financial transactions and support federal expenditures. Requested documentation, including general ledger entries, supporting documentation, federal reimbursement requests and related expenditures were either not provided or significantly delayed beyond the response period. Criteria: Per GASB standards and the Uniform Guidance (§200.303), entities must establish and maintain effective internal control systems that are properly documented and consistently applied to ensure the reliability of financial reporting. Cause: The Authority lacks adequate record retention, organization and formalized policies which limits their ability to respond to audits, reviews or compliance inquires in a timely manner. Effect: The absence of adequate documentation increases the risk of material misstatements in the financial statements and limits the ability of management and auditors to verify the effectiveness of internal controls. This condition contributed to multiple audit adjustments and delayed financial close processes. Recommendation: We recommend that management develop and implement standardized documentation protocols for all key financial reporting controls. This should include written procedures, evidence of review and approval, and periodic training for staff involved in financial reporting. Management Response: Today’s Marlboro County Housing Authority management acknowledges the finding and concurs with the auditor’s assessment regarding delays in providing access to key accounting records during the audit period. The Authority recognizes the importance of timely, complete, and well-organized documentation to support financial transactions and federal expenditures. The Authority's current staff did not have access to most of the data necessary to respond to the Auditor's request as the Authority was managed by the Housing Authority of Florence during the current year under audit. The Authority severed ties with the Housing Authority of Florence effective October 1, 2024. Going forward, The Housing Authority will ensure internal controls are in place including policies and procedures regarding financial reporting.

Housing Voucher Cluster Condition: During the audit of the Authority, it was noted that federal funds were inappropriately loaned to affiliated entities without proper authorization or adherence to federal cash management requirements. Specifically, the entity disbursed $43,533 in federal funds to the Housing Authority of Florence under the guise of a temporary loan, which was not supported by a formal agreement, lacked board approval, and was not repaid within the fiscal year. Criteria: According to 2 CFR §200.305(b), non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement of those funds. The OMB Compliance Supplement further clarifies that program costs must be paid by non-federal entity funds before submitting a payment request, and that advance payments must be limited to immediate cash needs. Cause: The entity lacked adequate internal controls to prevent the unauthorized use of federal funds for non-programmatic purposes. There was no formal cash management policy in place to govern inter-entity transactions or to ensure compliance with federal requirements. Effect: The use of federal funds as a loan to an affiliate exposed the entity to potential noncompliance with federal regulations, risked the misappropriation of funds, and may result in questioned costs subject to repayment. Questioned Costs: $43,533Recommendation: We recommend that the entity immediately cease the practice of loaning federal funds to affiliates, implement a formal cash management policy that includes controls over disbursements and inter-entity transactions and rain finance personnel on federal cash management requirements. Management Response: Today’s Marlboro County Housing Authority management concurs with the auditor’s finding that federal funds were disbursed to an affiliated entity without proper authorization, documentation, or compliance with federal cash management requirements. The Authority acknowledges that this disbursement represented a lapse in internal controls and was not consistent with the requirements outlined in 2 CFR §200.305(b). During the fiscal year ended September 30, 2024, the Authority also had a payable to the same affiliate in its Public Housing Program totaling $37,658. During the current 2024-2025 fiscal year, the Authority reimbursed its HCV program the amount loaned from its HCV program by the funds owed to the affiliate in its Public Housing Program. Today’s Marlboro County Housing Authority currently has an amount of $2,015 due to its affiliate as of May 31, 2025.

Capital Fund Program Grants Draws Condition: During our audit procedures over revenue recognition for the Capital Fund Program (CFP), we identified drawdowns of federal funds for which the client was unable to provide adequate supporting documentation. Specifically, the expenditures associated with the draw requests lacked invoices, contracts, or other substantiating records to demonstrate that the costs were allowable, allocable, and incurred in accordance with applicable federal requirements. Criteria: Per 2 CFR §200.403 and §200.302, costs charged to federal awards must be adequately documented and supported by source documentation. Additionally, 2 CFR §200.516(a)(3) requires auditors to report known questioned costs exceeding $25,000 for any federal program, even if not selected as a major program. Cause: The deficiency appears to result from inadequate internal controls over documentation retention and grant compliance monitoring for the CFP. Effect: The lack of documentation impairs the auditor’s ability to verify the allowability of expenditures, resulting in known questioned costs exceeding $25,000. Questioned Cost: $90,149 Recommendations: We recommend that management implement procedures to ensure that all draw requests under the CFP are supported by complete and accurate documentation. This includes maintaining invoices, contracts, and payment records that clearly link expenditures to the approved scope of work under the grant. Management Response: Today’s Marlboro County Housing Authority management acknowledges the auditor’s finding that documentation to support certain CFP drawdowns was incomplete or missing and concurs that this represents a failure to comply with Uniform Guidance documentation requirements under 2 CFR §200.302 and §200.403. The Authority recognizes the importance of maintaining complete and accurate supporting records—such as invoices, contracts, and payment documentation—to substantiate costs charged to federal programs and ensure allowability and allocability under the Capital Fund Program. Effective October 1st, 2024, all draw requests under the Capital Fund Program ARE supported by: Approved contracts or purchase orders  Invoices or other source documents  Proof of payment (e.g., canceled checks, ACH confirmations)  Documentation clearly linking each expense to an approved activity in the CFP Annual Statement

The Authority is required calculated utility allowances in accordance with its utility allowance standards and reflected in HUD form 52667. The Authority must use the lower of the approved voucher bedroom size or actual bedroom size when calculating the Utility Allowance to use in the calculation. During our audit, we noticed on four (4) different occasions that HUD Forms 50058 had utility allowances calculated not in accordance with the above criteria. The Authority has roughly 250 vouchers issued through out the fiscal year under examination which would translate to 3,000 Housing Assistance Payment transactions for the year. Of these, we reviewed 40 individual Housing Assistance Payment transactions, and found 4 instances of noncompliance. Personnel responsible for calculating the utility allowances were not informed of requirements and no internal controls were in place to ensure compliance. The Authority was in noncompliance of the Federal Regulation which resulted in errors in calculating Housing Assistance Payments (HAP) and utility reimbursement payments. 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 agrees.