THE HOUSING AUTHORITY OF THE CITY OF OPELIKA

Finding 2024 - 002 - Section 8 HQS Inspection Deficiencies Housing Choice Vouchers - CFDA No. 14.871; Grant period - year ended June 30, 2024 Cause: Lack of controls over compliance with HUD regulations and turnover of staff. Effect: Non-compliance with HUD regulations. Questioned Costs: None Identified. Repeat Finding: No Recommendation: We recommend the Authority should continue to strengthen its internal controls in relation to the HQS inspection and re-inspection process to ensure that they are completed within the required timeframe to meet the HUD compliance requirements. Management’s Response to Finding: The Authority is continuing to work on the procedures for failed inspections to ensure that the reinspections are performed within the 30-day requirement. The Authority is also planning on additional training for employees to make sure they are qualified to meet the HQS reinspection requirements. Responsible Party: Matthew McClammey, Executive Director, (334)745-4171. Anticipated Completion Date: June 30, 2025.

Finding 2024 - 003 - Housing Choice Vouchers Tenant Files Housing Choice Vouchers - CFDA No. 14.871; Grant period - year ended June 30, 2024 Criteria: The Code of Federal Regulations and HUD guidelines give the requirements for maintaining the tenant files for the Public Housing and Housing Choice programs. Specifically, HUD regulations CFR Parts 982.305 and 982.405 require Authorities to inspect units leased under the HCV program at the time of initial leasing and at least annually thereafter to ensure the units meet HQS. In addition, 24 CFR Part 960.253 gives the requirements for choice of rent and use of utility allowances. Also, the Authority’s policy and procedure dictate full compliance with these regulations, as well as guidelines to be followed in maintaining these files. Condition & Perspective: A current year review of 40 tenant files revealed a situation of continued errors and omissions in most of the files that leads to incomplete tenant documentation. The results of the review are as follows: 1. Of the 40 tenant files reviewed, 2 did not contain a signed HUD Form 9886. 2. Of the 40 tenant files reviewed, 3 did not have a HUD Form 52517. 3. Of the 40 tenant files reviewed, 4 did had not complied with HQS guidelines. Cause: Lack of controls over compliance with HUD regulations and turnover of staff. Effect: Non-compliance with HUD regulations. Questioned Costs: None Identified Repeat Finding: No Recommendation: We recommend that the Authority utilize a standard filing system based upon a checklist and issue this to all required personnel. We recommend that supervisors and managers review on a monthly basis a random sample of all files to determine compliance with federal guidelines and the Authority’s policy. Management’s Response to Finding: The Authority will work on strengthening its internal controls to correct this situation and ensure that they will be in compliance with the federal guidelines and the Authority’s policies. Responsible Party: Matthew McClammey, Executive Director, (334)745-4171. Anticipated Completion Date: June 30, 2025.

Finding 2024-004 - HUD Comprehensive Review, Section 8 Housing Choice Voucher Program – CFDA No. 14.871; Grant period – year ended June 30, 2024 Criteria: The Housing Choice Voucher Program Guidebook and other HUD PIH Notices and Handbooks provide requirements and guidance for which the Section 8 Housing Choice Voucher Program is to be administered and operated under. Condition and Perspective: In May of 2023, HUD conducted a Comprehensive Review of the Housing Authority’s Section 8 Housing Choice Vouchers Program. The results of the Review included the following Findings: Finding #1 – Board Resolution not established to confirm Board Meeting Dates and Times. Finding #2 - The OHA Board does not have a Resident Assisted Board Member. Finding #3 – The OHA’s procurement policy is not in compliance with the current federal procurement requirements. Finding #4 – The Authority does not have an original general depository agreement on file. Finding #5 – The Authority does not have a cost allocation policy or cost allocation plan to show whose activities support multiple programs worked or shared costs among programs and projects. Finding #6 – The Authority made $598 in bonus payments for retired employees with HCV funding. Finding #7 – The Authority failed to provide evidence of how it targets the Authority’s population to meet new admissions at or below 30% AMI. Finding #8 – The Authority has outstanding HCV payments. The Authority does not have repayment agreements for outstanding balances. Finding #9 – The Authority has tenant file errors.

Finding 2020-002 - HQS Enforcement Housing Choice Vouchers ? CFDA No. 14.871; Grant period ? year ended June 30, 2020 Criteria: The Code of Federal Regulations and HUD guidelines give the requirements for annual inspections to determine if the units leased to families meet the Housing Quality Standards. Specifically, HUD regulations CFR Parts 982.158 and 982.404 require inspections of units under HAP contract that fail to meet HQS. The PHA must require the owner to correct any life threatening HQS deficiencies within 24 hours after the inspections and all other HQS deficiencies within 30 calendar days or within a specified PHA-approved extension. Condition & Cause: HQS inspections were tested for compliance in the current fiscal year. Of the 23 failed HQS inspections selected for review: 3 units were not re-inspected within the 30-day requirement and none of those units were put into abatement. Effect: Non-compliance with HUD regulations. Questioned Costs: None Identified Repeat Finding: No Recommendation: We recommend the Authority strengthen its internal controls in relation to the HQS inspection and re-inspection process, to ensure that the inspections are completed within the time frames required by HUD. We further recommend the Authority seek repayment from the landlords found to be in receipt of ineligible HAP payments. Reply: Per Matthew McClammey, Executive Director, the Authority no longer employs an in-house HQS inspector, the Authority contracted with an inspection company to perform all HQS related inspections. -

Finding 2019-001 ? Section 8 Reporting VMS and FDS Housing Choice Vouchers ? CFDA No. 14.871; Grant period ? year ended June 30, 2019 Condition: The Quality Assurance Division (QAD) staff conducted a Financial Management Review during the June 30, 2019 FYE. Their review noted that the Opelika Housing Authority (OHA) had miscalculated and misreported the Restricted Net Position (RNP) and Unrestricted Net Position (UNP) balances. Criteria: 24 CFR Part 982.151 and 24 CFR Part 982.158 provides that under the Annual Contributions Contract the PHA agrees to administer the program in accordance with HUD regulations and requirements. Cause: The OHA reporting variances primarily occurred prior to a new executive director and chief financial officer coming to the organization and improving internal controls related to reporting. Questioned Costs ? None Identified: Effect: The OHA is unable to ensure the information reported to HUD in FDS and VMS is consistently accurate. Recommendation: We recommend that the OHA continue to work on completing the corrective actions included in the Financial Management Review report received from the Quality Assurance Division, dated June 18, 2019. Reply: Per Matthew McClammey, Executive Director of the Opelika Housing Authority, we have updated our written financial policies and procedures to ensure accurate reporting to HUD and have improved our internal controls to ensure that the Authority?s staff adheres to the written policies and procedures. We will submit the updated policies and procedures to HUD upon Board approval at our March 2020 board meeting. The Authority has made the necessary adjustments to the FDS and VMS.

Finding 2019-002 - Depository Agreements Housing Choice Vouchers ? CFDA No. 14.871; Grant period ? year ended June 30, 2019 Condition: The Quality Assurance Division (QAD) staff conducted a Financial Management Review during the June 30, 2019 FYE. Their review noted that the OHA was unable to provide a properly executed General Depository Agreement for the HCV financial accounts. This finding has been cleared by the Quality Assurance Division prior to the date of this report. Criteria: 24 CFR Part 982.52 requires the PHA to comply with the consolidated ACC, HUD regulations and other requirements for the program, and other HUD requirements, as regulations, Federal Register notices or other binding program directives as well as PHA?s HUD-approved applications for program funding. HUD regulation at 24 CFR Part 982.156 Depository for Program Funds, provides that: (a) Unless otherwise required or permitted by HUD, all program receipts must be promptly deposited with a financial institution selected as depositary by the PHA in accordance with the HUD requirements. (b) The PHA may only withdraw deposited program receipts for use in connection with the program in accordance with HUD requirements. (c) The PHA must enter into an agreement with the depositary in the form required by HUD. Cause: The OHA staff was unaware of the specific requirements of a properly executed General Depository Agreement form (HUD form 51999). Questioned Costs ? None Identified: Effect: A lack of a properly executed GDA negatively affects HUD?s ability to control program funds in the event of default on behalf of the PHA. Recommendation: We recommend that the Authority comply with the corrective action included in the Financial Management Review report received from the Quality Assurance Division, dated June 18, 2019. Reply: Per Matthew McClammey, Executive Director of the Opelika Housing Authority, we have properly executed a General Depository Agreement with the financial institution for all financial accounts that maintain HCV funds. We have provided a copy of the executed GDA to the QAD and this finding has been closed by the QAD.