Housing Authority of the City of Bessemer, AlabamaNon-Profit

2025-001 – Cash Management: Compliance Requirement: Cash Management; Condition and Criteria: Housing Authorities are required to have a sound cash management system in place to ensure that funds are reimbursed on a timely basis. During the current fiscal year audit, it was noted that two of the three blended component units had a bank overdraft on their financial statements from owing the Housing Authority more than the unrestricted funds available in the bank account. Type of Finding: Material Weakness Cause: The internal control structure was not adequate to prevent these deficiencies. Effect: Funds were not reimbursed on a timely basis. Questioned Costs: None known. Auditors’ Recommendation: We recommend that the Housing Authority strengthen its internal controls to ensure funds are reimbursed on a timely basis. Corrective Action Plan: The Housing Authority has enhanced its internal controls regarding interfund transactions by establishing a monthly process for requesting payment reimbursements and reconciling balances, and requiring component units to repay portions of outstanding balances with each transfer, utilizing a three-year amortization plan. Contac Person Responsible For Corrective Action: Cortney Coleman, Executive Director Anticipated Completion Date: March 31, 2027.

PART II. FINDINGS ? FINANCIAL STATEMENTS AUDIT 2022-001 ? Section 8 Housing Assistance Payments Program CFDA Number: 14.195, Section 8 Housing Assistance Payments Program Compliance Requirement: Eligibility Condition and Criteria: Under the compliance portion of the program, the PHA must verify the eligibility by documenting inspections, as appropriate. Of the 40 tenant files reviewed during the audit, eleven (11) did not contain an annual inspection. Type of Finding: Significant Deficiency Cause: The internal control structure was not adequate to prevent these deficiencies. Effect: Units were not inspected on a timely basis. Questioned Costs: None known. Auditors? Recommendation: We recommend that the Housing Authority strengthen its internal controls to ensure inspections are conducted on an annual basis. Corrective Action Plan: See attached response from Executive Director on page 42.

2022-002 ? Housing Choice Vouchers Program Tenant Files CFDA Number: 14.871, Housing Choice Vouchers Compliance Requirement: Eligibility Condition and Criteria: As part of the process of obtaining eligibility, documentation of items such as income verification, deductions from annual income, HUD Form 9886, Authorization for the Release of Information are required to be in the file, among other required forms. During the current year audit, 40 tenant files were reviewed. Of the 40 tenant files reviewed, the following was noted: 1) Four (4) files did not have recertification paperwork for the Housing Assistance Payment (HAP) that was selected for audit. 2) Two (2) files did not contain the required 3rd-party income verification. 3) The Utility Allowance Schedule did not match HUD Form 50058 in three (3) files. 4) Two (2) files did not contain HUD Form 9886. Type of Finding: Significant Deficiency Cause: The Internal Control Structure was not adequate to prevent these deficiencies. Effect: Required documentation was not located in the tenant files. Questioned Costs: None known. Auditors? Recommendations: We recommend that the Housing Authority strengthen its internal controls to ensure proper documentation in included in the tenant files. Corrective Action Plan: See attached response from the Executive Director on page 42.