Housing Authority of the City of Hot SpringsLocal Government

2025-001 Eligibility Condition and Criteria: The Authority’s purpose for existence is providing decent, safe and affordable housing to low-income persons. As such, the Authority prepares a file for each admitted family, which contains information necessary to determine eligibility for assistance and calculations of rent assistance to be paid on the family’s behalf. HUD regulations prescribe the content of these family files. These requirements consist of the following: a. As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility. b. For both family income examinations and reexaminations, obtain and document in the family file third party verification of: (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income-based rent. c. Determine income eligibility and calculate the tenant’s rent payment in accordance with HUD regulations. d. Select tenants from the public housing waiting list in accordance with the PHA’s tenant selection policies. e. Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary. Population and Items Tested: Testing of seventy-one family files revealed the following deficiencies: 1. One lacked documentation of rent reasonableness. 2. One file lacked a utility allowance calculation. 3. One file lacked income verification at lease up. Auditor’s Recommendation: A thorough review of tenant files should be performed for the purpose of eliminating the deficiencies. This is a repeat finding. Grantee Response: We will comply with the auditor’s recommendation. Anticipated Completion Date: June 30, 2026

2025-002 Special Tests and Provisions Condition and Criteria: The Authority’s purpose for existence is to provide decent safe and affordable housing to low-income persons. As such, HUD requires the Authority to comply with special tests and provisions relating to its Housing Choice Voucher program. The Authority must inspect the unit leased to a family at least annually to determine if the unit meets Housing Quality Standards (HQS) and the Authority must conduct quality control re-inspections. The Authority must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). Population and Items Tested: Testing of sixty family eligibility files revealed nine files that lacked documentation of a passed HQS inspection. It was determined these families were occupants of Rental Assistance Demonstration (RAD) units. As such, the Authority entered into a project-based housing assistance payment contract which outlines the Authority’s responsibility to randomly inspect 20% of the contract units in each building in accordance with HQS standards. These random inspections were not performed in the current audit period. Auditor’s Recommendation: The Authority should perform a random inspection of 20% of the units in each building as per the housing payments contracts and ensure documentation of a “passed” housing quality inspection is maintained. A thorough review of tenant files should be performed for the purpose of eliminating the deficiencies. Grantee Response: HQS inspections were performed upon move-in of a new tenant. We will continue the move-in inspections and perform the required random sample of inspections for 20% of the units under contract in each building. Anticipated Completion Date: June 30, 2026

Housing Authority of the City of Hot Springs respectfully submits the following corrective action plan for the year ended June 30, 2024. Responsible Official: Linda Langan, Executive Director Name and address of independent public accounting firm: Miller & Rose, PA 1309 East Race Searcy, AR 72143 Audit period: Year ended June 30, 2024 Oversight Agency: U.S. Department of Housing and Urban Development The findings from the June 30, 2024 audit are discussed below. The findings are numbered to correspond to the auditing findings disclosed in Section C of the Schedule of Findings and Questioned Costs. B. FINDINGS - FINANCIAL STATEMENTS AUDIT None C. FINDINGS AND QUESTIONED COSTS-MAJOR FEDERAL AWARD PROGRAMS AUDIT Department of Housing and Urban Development CFDA No. 14.871 – Housing Choice Voucher 2024-001 Eligibility Condition and Criteria: The Authority’s purpose for existence is providing decent, safe and affordable housing to low-income persons. As such, the Authority prepares a file for each admitted family, which contains information necessary to determine eligibility for assistance and calculations of rent assistance to be paid on the family’s behalf. HUD regulations prescribe the content of these family files. These requirements consist of the following: a. As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility. b. For both family income examinations and reexaminations, obtain and document in the family file third party verification of: (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income-based rent. c. Determine income eligibility and calculate the tenant’s rent payment in accordance with HUD regulations. d. Select tenants from the public housing waiting list in accordance with the PHA’s tenant selection policies. e. Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary. Population and Items Tested: Testing of seventy-one family files revealed the following deficiencies: 1. Two lacked documentation of rent reasonableness. 2. One file lacked an HQS inspection in the file. 3. Three files calculated an incorrect housing assistance payment. 4. One file lacked a utility allowance calculation. 5. One file lacked income verification at lease up. Auditor’s Recommendation: This is a repeat finding. A thorough review of tenant files should be performed for the purpose of eliminating the deficiencies. Grantee Response: We will comply with the auditor’s recommendation. Anticipated Completion Date: June 30, 2025

Condition and Criteria: The Authority’s purpose for existence is providing decent, safe and affordable housing to low- income persons. As such, the Authority prepares a file for each admitted family, which contains information necessary to determine eligibility for assistance and calculations of rent assistance to be paid on the family’s behalf. HUD regulations prescribe the content of these family files. These requirements consist of the following: a. As a condition of admission or continued occupancy, require the tenant and other family members to provide necessary information, documentation, and releases for the PHA to verify income eligibility. b. For both family income examinations and reexaminations, obtain and document in the family file third party verification of: (1) reported family annual income; (2) the value of assets; (3) expenses related to deductions from annual income; and (4) other factors that affect the determination of adjusted income or income-based rent. c. Determine income eligibility and calculate the tenant’s rent payment in accordance with HUD regulations. d. Select tenants from the public housing waiting list in accordance with the PHA’s tenant selection policies. e. Reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary. Population and Items Tested: Testing of sixty family files revealed the following deficiencies: 1. Two lacked documentation of rent reasonableness. 2. One file contained a HAP contract not signed by the owners. 3. Two files calculated an incorrect housing assistance payment. 4. One file lacked signed Form 9886 authorization for the period under review. Auditor’s Recommendation: A thorough review of tenant files should be performed for the purpose of eliminating the deficiencies. Grantee Response: We will comply with the auditor’s recommendation. Anticipated Completion Date: June 30, 2024

Condition and Criteria: The Authority’s purpose for existence is providing decent safe and affordable housing to low-income persons. As such, HUD requires the Authority to comply with special tests and provisions relating to its Housing Choice Voucher program. The Authority must inspect the unit leased to a family at least annually to determine if the unit meets Housing Quality Standards (HQS) and the Authority must conduct quality control re-inspections. The Authority must prepare a unit inspection report (24 CFR sections 982.158(d) and 982.405(b)). Population and Items Tested: Per Table 10-1 of the Housing Choice Voucher Guidebook, the Authority was required to perform 19 quality control housing reinspections. Ten quality control re-inspections could be documented. Auditor’s Recommendation: The Authority should perform housing quality control re-inspections according to HUD guidelines. Grantee Response: We will comply with the auditor’s recommendation. Anticipated Completion Date: June 30, 2024

Finding 2022-001 - HUD Financial Management Review, Section 8 Housing Choice Voucher Program ? CFDA No. 14.871; Grant period ? year ended June 30, 2022 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 Cause In July of 2022, HUD conducted a Financial Management Review of the Housing Authority?s Section 8 Housing Choice Vouchers Program. The Review covered the period of July 1, 2016 through June 30, 2022. The results of the Review included the following Findings: Finding #1 - The HSHA HCV financial records and book of accounts are non-compliant with the regulatory requirement(s) and require significant improvement. Finding #2 - The HSHA does not have a Properly Executed General Depository Agreement. Finding #3 - HSHA is not properly tracking FSS Escrow accounts. Finding #4 - There Are Material Disallowed and Questionable Expenses Charged Directly to the HCV Administrative Account. Finding #5 - The RNP and UNP Account Balances Were Incorrectly Calculated and Incorrectly Reported in the VMS and FDS. Effect Violation of Section 8 Housing Choice Voucher Program requirements (Findings #1 & #2), Failure to report FSS Program activity in accordance with HUD financial reporting requirements (Finding #3), Violation of the Agency?s ACC agreement and appropriation law (Finding #4), Inaccurate VMS reporting (Finding #5). Questioned Costs ? $23,460.60.Recommendation We recommend that the Authority execute the corrective actions that HUD?s QAD outlined in the Review Report dated November 11, 2022. Reply The Authority submitted corrective actions to HUD dated February 23, 2023, which included implementing HUD?s recommended corrective actions. - 40

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