South Carolina Regional Housing Authority No. 1

2023-001 Eligibility: Public Housing Tenant Files Public and Indian Housing Program – CFDA Number 14.850 Significant Deficiency in Internal Control and Other Matter to be Reported Under the Uniform Guidance Condition: Out of a total tenant population of 1,275, 25 files were selected for testing. Exceptions were noted as follows: • 3 out of 25 tenants where an outdated flat rent was used instead of the current amount. • 1 tenant where wage income was calculated as paid bi-weekly when it was actually paid semi-monthly. • 2 tenants where the prior year social security income was used when the current year amount was known. Criteria: HUD regulations require that the Authority perform certain prescribed verification procedures and obtain the required documentation to assure that tenants qualify for low income housing and that amounts submitted to HUD for tenant assistance are calculated according to HUD rules. Questioned Costs: None. Effect: The Authority is not in compliance with all of the HUD requirements regarding eligibility and tenant re-examinations, which could result in incorrect total tenant payments for rent. Cause: Procedures to ensure compliance with all of the HUD requirements were not being carefully followed. Auditor’s Recommendation: The Authority should correct the deficiencies noted in the tested files and utilize an ongoing quality control review process on the entire tenant population to ensure proper compliance with the requirements related to tenant eligibility. Ongoing staff training and timely management reviews should be utilized to ensure staff is aware of acceptable procedures. In addition, the Authority should review staffing levels, skill sets and case load. Views of Responsible Officials of the Auditee: The Authority agrees with the finding and has taken corrective action. See the “Action Taken” on the Corrective Action Plan.

2022-001 Eligibility: Public Housing Tenant Files Public and Indian Housing Program ? CFDA Number 14.850 Material Weakness in Internal Control, Material Noncompliance Condition: Out of a total tenant population of 1,275, 25 files were selected for testing. Exceptions were noted as follows: ? 6 files where the annual re-examination was not performed within 12 months. Criteria: 24 CFR 960.257 requires the Authority to conduct a re-examination of family income and composition at least annually and must make appropriate adjustments in the rent after consultation with the family and upon verification of the information. Questioned Costs: None. Effect: The Authority is not in compliance with all of the HUD requirements regarding eligibility and tenant re-examinations, which could result in incorrect total tenant payments for rent. Cause: During the year, the Authority changed when it would perform annual re-examinations to be the anniversary of the month the tenant was first admitted to the program. In implementing this change, the Authority failed to timely recognize that this would result in some tenants not having a re-examination within twelve months. Auditor?s Recommendation: The above-mentioned change will only result in non-timely annual re-examinations for some tenants for one time, and will effectively correct itself in future years. Nonetheless, the Authority should review all annual re-examinations for all tenants and immediately perform annual re-examinations for any remaining tenants that have not already had their next re-examination. Views of Responsible Officials of the Auditee: The Authority agrees with the finding and has taken corrective action. See the ?Action Taken? on the Corrective Action Plan.

2019-001 Special Tests and Provisions: Utility Allowance Study Program: U.S. Department of HUD: Public and Indian Housing (CFDA 14.850) Type of Finding: Material Weakness in Internal Control over Compliance Statement of Condition The Authority did not perform an annual study for utility allowances. Instead, the Authority used the apartment portion of the Section 8 Utility Allowance study for purposes of setting utility allowances for public housing tenants. These utility allowances were significantly higher than what was previously used for public housing and significantly higher than the amounts determined by an independent study that was implemented in April 2020 Criteria 24 CFR 965.0507 requires the PHA to review at least annually the basis on which utility allowances have been established and 24 CFR 965.505 requires the PHA to design methods of establishing utility allowances for each dwelling unit category and unit size that shall be approximate to a reasonable consumption of utilities by an energy-conservative household of modest circumstances consistent with the requirements of a safe, sanitary, and healthful living environment Questioned Costs: None. Effect The Authority is not in compliance with all of HUD?s requirements regarding the establishment of reasonable utility allowances. The effect of using incorrect utility allowances was such that tenants received on average an allowance that was approximately $45 per month greater than the utility allowances subsequently determined by an independent study in 2020. The excessive utility allowances caused the rents due from tenants to decrease in 2019 by approximately $700,000. This can potentially cause the 2021 operating subsidy to be overstated by a similar amount. Cause Procedures to ensure compliance with all of HUD?s requirements were not being carefully followed. Recommendation The Authority should conduct an independent utility allowance study on an annual basis. The Authority has already hired an independent company to perform a utility allowance study for 2020 and implemented the new utility allowances effective April 2020. Views of Responsible Officials of the Auditee The Authority concurs with this finding and will establish more review, oversight and training for the staff responsible for these procedures.

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