Housing Authority of the City of Auburn, Alabama

Finding 2025-001 – Moving to Work Resident Files – Eligibility – Rent Calculations & HAP Disbursements Noncompliance & Material Weakness – ALN 14.881 Condition & Cause: We reviewed fifteen (15) HCV project-based resident files and twenty (20) HCV tenant-based resident files for a total of thirty-five (35) Moving to Work resident files reviewed. We noted fourteen (14) files with instances of noncompliance, all of which came from the tenant-based voucher sample. • Five (5) files contained miscalculations of income or HAP • Four (4) files lacked proper verification of income or deductions • Four (4) files lacked the Authorization for Release of information • Three (3) files were missing the appropriate lease • Three (3) files lacked the Annual Application for Continued Occupancy • Three (3) files lacked the EIV when an income review was conducted • One (1) file did not pass HQS inspection and the Agency continued paying HAP • One (1) file lacked the picture ID of the Head of Household We noted that the Agency struggled with hiring and staff turnover during the audit period, which likely contributed to the lapse in compliance adherence. As a mitigating factor, we note that the Agency is currently conducting a one-time internal review of 100% of tenant files. Criteria: The Code of Federal Regulations, the Housing Authority’s Administrative Plan, Moving To Work Plan, and specific HUD guidelines in documenting and maintaining resident files. Effect: Missing verification and miscalculations of adjusted income or HAP increases the risk of improper subsidy payments and material misstatements of the financial statements. Failure to abate HAP in instances where the unit did not pass HQS inspections expose the Agency to financial liability. Incomplete documentation reduces the Agency’s ability to substantiate eligibility determinations. Ongoing noncompliance may also draw scrutiny from regulatory bodies, increasing the risk of financial penalties or loss of funding. Recommendation: We recommend that the Agency complete its current review of all participant files to identify and correct deficiencies. Additionally, we suggest that the Agency implement a routine quality control review process to effectively monitor compliance with local and federal regulations regarding the maintenance of tenant files. Questioned Costs: We performed an extrapolation of the housing assistance overpayment based on our reviewed sample of resident files. This resulted in likely questioned costs of $61,989, which reflects 1.34% of total HAP expense. Repeat Finding: Yes Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2024-001 – Moving to Work Resident Files – Eligibility – Rent Calculations & HAP Disbursements Noncompliance & Significant Deficiency – ALN #14.881 Condition & Cause: We reviewed twenty (20) HCV tenant-based resident files and fifteen (15) HCV project-based resident files for a total of thirty-five (35) Moving to Work resident files reviewed. In the TBV file review we noted one (1) instance of a resident’s income being miscalculated on HUD form 50058. The Authority understated the resident’s income which resulted in a lower rent charge amount than expected. We also discovered one (1) instance of the Authority issuing a double payment of HAP funding to a landlord. The total amount of the overpayment was $2,006 which has since been requested back from the property owner. Criteria: The Code of Federal regulations, the Housing Authority’s Administrative Plan and specific HUD guidelines in documenting and maintaining resident files. Effect: Improper disbursements of housing assistance payments can result in discrepancies on the financial statements as well as noncompliance with federal grant funds. Improper calculation and documentation of tenant income can lead to incorrect calculation of HAP subsidy and misstatements in the financial statements. Ongoing noncompliance may also draw scrutiny from regulatory bodies, increasing the risk of financial penalties or loss of funding. Recommendation: We recommend that the Agency perform a comprehensive audit of tenant files for existing tenants to identify any additional deficiencies and assess the need for further staff training. Additionally, we suggest that the Agency enhance its quality control reviews to effectively monitor compliance with local and federal regulations regarding the maintenance of tenant files. Questioned Costs: We performed an extrapolation of the housing assistance overpayment based on our reviewed sample of resident files. This resulted in an extrapolated amount of $33,839 which is considered immaterial to the financial statements. Repeat Finding: No Was sampling statistically valid? Yes Views of responsible officials: The PHA agrees with the results of the audit and recommendations.

Finding 2022-001 ? Moving to Work Tenant Files ? Eligibility ? Annual Recertifications ? Noncompliance & Significant Deficiency ? CFDA #14.881 Criteria: The Code of Federal regulations, the Housing Authority Administrative Plan and specific HUD guidelines in documenting and maintaining Moving to Work tenant files. Federal Regulations and Local policies require that reexaminations be done on a timely basis. Condition & cause: We examined forty (40) tenant files from the Moving to Work program. Twenty (20) of these files were project-based while the remaining twenty (20) files were tenant based. Of the project-based voucher files that were examined eighteen (18) of these did not contain an updated annual reexamination. In response to the COVID-19 pandemic the Authority adopted waivers that allowed for annual reexaminations to be postponed, but these should have been completed by the end of the calendar year that they were due. Once the waivers expired these recertifications became due. Consequently, our review concluded that they were not completed in a timely manner. We note that these project-based files were administered by a consulting firm assisting the agency. All files that we examined which were administered by the Housing Authority did not have this deficiency. Recommendation: We recommend that the authority conduct a review of all files administered by the consulting firm and implement corrective actions to the files as deemed necessary. We also recommend that the Housing Authority monitor on a consistent monthly basis all client files to determine which ones should be scheduled for reexamination. Questioned Costs: None Repeat Finding: No Was sampling statistically valid? Yes

Finding 2020-001 ? Internal Control over Housing Assistance Payments ? Material Weakness & Noncompliance, CFDA #14.871 Condition & Cause: Our review of internal control over the tenant rent cash receipts revealed a significant number of tenants whose rent was not being properly updated in the client?s software in a timely manner. For example, if a participant had a recertification/interim update that affected the rent payment then this would not be reflected in the accounting software until the following month or, in one case, not reflected at all. This would result in the month after the change not reflecting the update. In the examination of thirty-five receipts, we discovered ten errors of tenant rent not being updated in the appropriate month and the rent not being correctly updated ranging from one to five months. As these are participants in the PBV program the HAP portion of accounting was also affected. This failure in internal control was neither discovered by the client nor does it reveal the significance of the error in relation to the client?s financial statements. Therefore, it is reasonably possible that a misstatement could occur and not be prevented, detected, or corrected by the Authority?s existing internal control. Criteria: The Code of Federal Regulations, the Housing Authority?s Administrative Plan, and specific HUD guidelines in internal controls over cash receipts. Effect: Due to the scope of audit tests conducted in conformity of the HUD Uniform Guidelines, these mistakes do not reveal the impact it has on the financial statements. Additionally, these errors caused the tested tenants to overpay in the subsequent month. As a mitigating factor we have performed analytical procedures on the HAP received/disbursed and do not believe this to materially alter the financial position of the Authority. Recommendation: We recommend that the Authority reviews their current procedures for annual recertifications and rent changes in the Project Based Voucher department. We recommend a check and balance approach to establishing agreement between what was entered for tenant rent from the Project Based Voucher department to the Landlord department within a timely manner as well as reviewing one hundred percent of tenant rent changes to determine the scope of the errors. Questioned Costs: None Repeat Finding: No Was sampling statistically valid: Yes Views of the responsible officials: The PHA agrees with the results of the audit and recommendation.