Housing Authority of the City of WynneLocal Government

Federal Program: Housing Choice Vouchers, Federal Assistance Listing No. 14.871 Criteria: The PHA is required to submit information monthly via the Voucher Management System (VMS). The Department reviews VMS data to identify issues of concern to PHAs and / or the Department. VMS is used for budget formulation, utilization analysis, and funding allocations. Condition: The VMS category UML contained a reporting discrepancy of 38 UML for the year, a variance of 3.26%. A HUD Validation Review for March 2022 through February 2023 showed a similar discrepancy. Questioned costs: $0.00 Effect: Timely reporting prior to funding calculation can make a significant difference to housing the number of families in the communities that PHA serve. Cause: The PHA provided detail software reports that did not always match what was reposted in VMS. Recommendation: The PHA should enter adjustments and revisions as they are discovered to ensure accurate data is available for utilization and budget projection purposes. Views of responsible officials and planned corrective actions: We will comply with the auditor’s recommendation and the HUD recommendations from their recent review and take the following steps: 1. PHA will move families out of the system and submit the corresponding 50058’s immediately upon termination. 2. PHA will ensure that 5008’s are accepted into the VMS system to accurately reflect program activity, including move-in/outs and port-ins/outs in a timely manner. 3. PHA will enter adjustments and revisions as they are discovered to ensure accurate data. As the VMS data changes in our system, the corrected reports will be forwarded to the fee accountant to ensure accurate data reporting. 4. PHA will ensure that EOP actions for tenants correspond to the dates that the tenants have been terminated from the program. 5. For Quality Control, the PHA will review the VMS reports at the beginning of the month and the end of the month, monitoring changes that may need to be reported, including move-ins, move-outs, port-in/outs, and correcting of corresponding dates, and removal of expired vouchers. This data will be reviewed by the Housing Manager and the Executive Director.

2020-001 Utility Allowance Review Federal Program: (Housing Choice Vouchers), CFDA No. 14.871 Condition and Criteria: The entity must review utility rate data for each utility category each year and must adjust its utility allowance schedule if there has been a rate change of 10% or more for a utility category or fuel type since the last time the utility allowance schedule was revised. Evidence of the utility review could not be located. Questioned costs: $.00 Effect: Amounts used as the utility allowance may be out of date and incorrect. Recommendation: Utility allowances should be reviewed annually and revised if there is a rate change of 10% or more. Views of responsible officials and planned corrective actions: We will comply with the recommendation.

2020-002 Housing Quality Standards (HQS) Quality Control Re-inspections Federal Program: (Housing Choice Vouchers), CFDA No. 14.871 Condition and Criteria: The PHA must inspect the unit leased to a family at least annually to determine if the unit meets HQS, and the PHA must conduct quality control of re-inspections. The quality control re-inspections were not performed. Questioned costs: $.00 Recommendation: The required re-inspections should be performed for the purpose of quality control. Views of responsible officials and planned corrective actions: We will comply with the recommendation.

2020-003 VMS Reporting Federal Program: (Housing Choice Vouchers), CFDA No. 14.871 Criteria: The VMS collects data on monthly leasing activities and costs for the HCV program via mandatory PHA reporting. The VMS is a critical data system that is used for a variety of major functions, including budget formulation, utilization analysis, and funding allocations. Condition: As noted in a recently conducted VMS validation review by the Quality Assurance Division (QAD) of HUD, corrections are needed to VMS data. The purpose of the review was to validate the unit months released and related housing assistance payment expenses. The computer system utilized by the PHA was unable to run accurate reports for the period. Some of the data was available in a manual format but differences were noted between the supporting data and the amounts reported in the VMS reporting. Context: Notice PIH 2015-16 state that PHAs are required to transmit certain leasing and cost data electronically through VMS. Effect: HUD relies on the data for budget formulation, cash management, monitoring, determining renewal funding levels, and funding-related factors under the Section 8 Management Assessment Program (SEMAP). Inaccurate reporting in VMS could result in incorrect funding. Cause: The PHA did not verity amounts or used incorrect amounts when reporting in the VMS system. Recommendation: The PHA is encouraged to contact their software provider to ensure they are utilizing their VMS reporting options fully. The PHA should also implement any recommendations supplied during the recently completed review. Views of responsible officials and planned corrective actions: The HUD review has been closed out and we have implemented procedures to ensure that the amounts reported in the VMS system are correct.

SECTION II - FINANCIAL STATEMENT FINDINGS #2019-001 Lack of Segregation of Duties (Previous Finding #2018-001) CFDA #14.850, #14.871 Criteria: The Housing Authority should have a sufficient and properly designed internal control structure. This structure relies greatly on a proper segregation of duties between individuals. In the perfect situation, duties relating to asset custody and initiating, authorizing, recording, processing and reporting financial data, and complying with federal award requirements would be segregated to provide reasonable assurance that a misstatement of the authority's financial statements or noncompliance with federal award compliance which is more than inconsequential would be prevented or detected and corrected. Condition: The Housing Authority has two administrative employees and as a result does not have the personnel to assign duties and responsibilities in such a way which would segregate duties as mentioned above. The limited number of employees results in an inadequate overall internal control structure design. Specific areas affected are described below: Cash and Cash transactions ? The administrative employees, including the Executive Director, control the initiating, recording, processing and reporting of cash transactions. The Authority's controls over cash include a monthly bank reconciliation prepared by a fee accountant who receives the statements directly from the bank. These reconciliations are reviewed by the Executive Director. Revenues and Receivables - The Executive Director has final control over the processing of revenues and receivables. These revenues and receivables are recorded by the fee accountant on a monthly basis. Expenditures/Expenses and Accounts Payable - The Executive Director controls the initiating, recording, processing and reporting of expenditures/expenses. The Housing Authority requires dual signatures on all checks written, the Executive Director and a Board Member. Invoices are reviewed at the time of signature; however, the Executive Director maintains control over the checks before and after signature. The Executive Director determines the account classification for expenditures. These expenditures are reviewed monthly by the fee accountant. Federal Award Compliance - The Executive Director maintains sole control over the administration of the major programs of the Housing Authority. Participant eligibility and assistance is determined by the housing authority personnel. Cause: Due to cost restrictions, the Housing Authority has limited staff. Resources are not currently available for additional employees for the appropriate segregation of duties. Effect: The lack of segregation of duties related to controls as stated above are significant deficiencies that could result in the likelihood that a material misstatement of the financial statements or noncompliance that would be material to a major federal program may occur and not be prevented or detected. HOUSING AUTHORITY OF THE CITY OF WYNNE WYNNE, ARKANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED MARCH 31, 2019 SECTION II - FINANCIAL STATEMENT FINDINGS Recommendation: As the Housing Authority has limited resources available, at the current time, additional segregation of duties is not financially feasible. The Housing Authority should review its procedures and controls to determine additional controls which can be implemented in order to achieve the control objectives related to segregation of duties. The cost effectiveness of these actions should be considered in the implementation of additional controls. SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS See above finding regarding segregation of duties as it is also applicable to internal control over major programs.

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