HOUSING AUTHORITY ST CHARLESLocal Government

Insufficient Cash and Deficit of Unrestricted Net Position (Significant Deficiency and Other Noncompliance applicable to the Section 8 Housing Choice Voucher Program, Other Noncompliance applicable to the Public Housing Program) Public Housing Program – Assistance Listing No. 14.850a, Section 8 Housing Choice Voucher Program – Assistance Listing No. 14.871; Grant Period- Fiscal Year-End September 30, 2025 Criteria Section 8 Housing Choice Voucher Program administrative grants are provided and intended to fund administrative and operating costs of the Program except for housing assistance payments. Housing assistance payments are funded separately and independent of administrative grants. Administrative grants are established and published by HUD and are calculated based on the number of voucher units leased at the beginning of each month. Condition As of the beginning of fiscal year 2025 the Section 8 Housing Choice Voucher Program had an unrestricted net position deficit of $103,785. As of the end of fiscal year 2025 the Program had an unrestricted net position deficit of $169,864. During fiscal year 2025 the Program incurred an additional unrestricted net position deficit of $66,079. Additionally, the Public Housing Program advanced the Section 8 Housing Choice Voucher Program $71,841 during fiscal year 2025, which is an unallowable use of Public Housing Program assets. This is a repeat finding from the fiscal year 2024 independent audit (fiscal year 2024 Finding 2024-001). Questioned Costs - None Cause The fiscal year 2025 deficit is a result of charging administrative and operating costs to the Section 8 Housing Choice Voucher Program which exceed the administrative and operating costs HUD has agreed to fund. Effect Expense charges to the Section 8 Housing Choice Voucher Program in excess of expenses HUD has determined reasonably necessary, and cash borrowings from the Public Housing Program. Recommendation Recommendation- We recommend that the Authority analyze and evaluate charges and allocations to the Section 8 Housing Choice Voucher Program and budget administrative and applicable operating expenses of the Program within HUD’s administrative funding limits. Additionally, we recommend that the Authority abstain from advancing Public Housing Program assets to the Section 8 Housing Choice Voucher Program. Management’s Response The Authority will analyze and evaluate charges and allocations to the Section 8 Housing Choice Voucher Program and budget administrative and applicable operating expenses of the Program within HUD’s administrative funding limits. Additionally, the Authority will abstain from advancing Public Housing Program assets to the Section 8 Housing Choice Voucher Program. Jebidiah Jackson, Executive Director, has assumed the responsibility of executing this corrective action as of August 1, 2026.

Non-compliance with Cash Management Requirements of the Capital Fund Program (Other Noncompliance) Capital Fund Program – Assistance Listing No. 14.872, Grant Period- Fiscal Year-End September 30, 2025 Criteria Uniform Guidance Cash Management requirements of the Capital Fund Program require the Authority to minimize time elapsing between the transfer of funds from the U.S. Treasury and disbursement to the applicable contractors or vendors (2 CFR Section 200.305.b). Condition As of the beginning of fiscal year 2025 the Authority held $179,995 of unexpended Capital Fund Program grant draws. Instead of funding Capital Fund Program expenditures from these unexpended funds during the fiscal year 2025, the Authority continued to draw funds from Capital Fund Program grants to fund fiscal year 2025 expenditures. Further, during fiscal year 2025 the Authority drew an additional $475,945 of Capital Fund Program grant proceeds, which were not expended during the fiscal year and resulted in cumulative unexpended grant draws (unearned grant revenue) as of September 30, 2025 of $655,940. Questioned Costs - None Cause Lack of sufficient understanding of Cash Management Requirements of the Capital Fund Program. Effect Non-compliance with Uniform Guidance Cash Management requirements of the Capital Fund Program. Recommendation With the exception of Capital Fund Program grant authorizations budged for Public Housing Program operating assistance (Capital Fund Grant Budget Line Item 1406), we recommend that the Authority expend the unexpended Capital Fund Program grant proceeds held prior to drawing down additional funding from Capital Fund Program grants.Management’s Response Management's Response- With the exception of Capital Fund Program grant authorizations budged for Public Housing Program operating assistance, the Authority will expend the unexpended Capital Fund Program grant proceeds held prior to drawing down additional funding from Capital Fund Program grants. Jebidiah Jackson, Executive Director, has assumed the responsibility of executing this corrective action as of August 1, 2026.

Most of the audit year was under the direction of an Interim Director. The current Executive Director began on July 1, 2024. Section Eight Housing Choice Voucher Program-CDFA#14.871 and Low Rent Program-CDFA#14.850 Finding 2024-001-Insufficent Restricted Cash and Deficit in Unrestricted Net Position-Allowable Costs Criteria and Condition HUD designates the Housing Choice Voucher advances to be in two categories: (a)-strictly to be used for HAP payments and (b)-to be used to pay for all non-HAP payment expenses identified with the HCV program. The (b) portion is considered Unrestricted HAP equity. When this number is a negative, this means that the HCV program has spent more than it should have. At September 30, 2024, the deficit as shown on page 11, of the Statement of Net Position, is $103,785. Context The $190,020 of restricted cash in the HCV program is $16,765 for HAP payments and $173,255 of remaining DHAP disaster funds which can only be spent with the permission of HUD. In addition, the HCV program has $410,700 of unrestricted cash. However, the HCV owes the General Fund (Low Rent) program a greater amount, $546,722, as shown on page 11 of the Statement of Position. Therefore, there are no available funds to cover the deficit of $103,875. Interfund amounts should be periodically reduced to close to zero. If not, an indefinite interfund due to is characterized as a permanent transfer between funds, which is not allowed per HUD regulations. Effect The authority has incurred and paid $103,785 (the deficit amount) more for HCV overhead than it should have. Cause It appears that the authority is paying a significant amount for consulting fees that is included in administrative expense. This is at least part of the issue. Questioned Costs None Recommendation The authority should seek ways to reduce the overhead expenses associated with the HCV program. Consulting fees in particular should be reviewed. $75,369 paid in the audit year to one consulting firm was charged to the HCV program. An additional amount of $101,401 was paid to the same firm from the General (Low Rent) Fund. The amount paid by this authority for consulting fees, even with an ongoing RAD conversion, appears to be excessive, in our opinion. View of Responsible Official and Planned Corrective Action I am Jedidiah Jackson. I was hired as Executive Director and started July 1, 2024. I believe that many of the issues noted in this audit have been corrected and I am working on the remaining issues.

Low Rent Program-CDFA#14.850, Section Eight Housing Choice Voucher Program-CDFA#14.871 Finding 2024-002-Internal Controls Inadequate for Disbursements-Allowable Costs Criteria and Condition Good internal controls should be in place to make sure that disbursements are for eligible payments, are correctly classified, and are timely paid. Good controls ensure that there is proper, documented review of all of these functions. Records should be maintained in an order that is conducive to efficient and timely summarizing by the outside fee accounting firm. Unaudited financial statements should be produced on a timely basis, and reviewed timely by the board of commissioners. Context In our initial sample of sixty disbursements that totaled $440,228, ten of the sixty were unsupported. The unsupported totaled $10,718. Of the total VISA payments of $20,060, $15,179 were unsupported. A total of $25,897 in our tests were unsupported. Effect Unsupported payments were made. Cause These issues have been noticed with this entity for years. Questioned Costs $25,897 Recommendation Management should make sure that all disbursements are adequately supported. View of Responsible Official and Planned Corrective Action We will comply with the auditor’s suggestions.

The person who was the initial Executive Director for the audit year was hired in June 2018. She passed away on May 21, 2023. A person was hired as Interim Director effective June 1, 2023, and served as Interim through June 30, 2024. A new E.D. was hired, who began on July 1, 2024. Low Rent Program-CDFA # 14.850, Section Eight Housing Choice Voucher Program-CDFA# 14.871 and Capital Fund-#14.872-Allowable Costs Finding 2023-001-Internal Controls Inadequate for Disbursements-Allowable Costs Criteria and Condition Good internal controls should be in place to make sure that disbursements are for eligible payments, are correctly classified, and are timely paid. Good controls ensure that there is proper, documented review of all these functions. Records should be maintained in an order that is conducive to efficient and timely summarizing by the outside fee accounting firm. Unaudited financial statements should be produced on a timely basis, and reviewed by the Board of Commissioners. Context In our original sample of sixty disbursements, seven of the sixty were not supported by invoices or other adequate documentation. In our expanded tests of disbursements, a total of $29,986 of disbursements were not supported by adequate documentation. These unsupported disbursements included checks and electronic payments. Unsupported payments were noted to vendors, and credit cards. Without the proper documentation, it is impossible to be certain that these were business related expenses. In addition, there was a lack of documented, supervisory review of the invoices or statements by a second party before the disbursements were paid. A second review was not noted for electronic payments. Accounting information was not sent to the fee accountant for the audit year on a timely basis. The fee accountant was not able to submit the unaudited financial statements until June 19, 2024. The defined contribution plan is underpaid by a total of approximately $12,634 for the years ending September 30, 2022, 2020, and 2019 (2021 was correct). In addition, $1,600 was contributed for the current year for an ineligible employee. Other disbursements issues noted include the following: (a)-Duplicate payments were made to vendors. Interim management that began June 2023 reduced the amount of noted exceptions. (b)-Late fees were assessed by vendors (c)-General Fund check vouchers were numerically out of order for most of the year, which made processing much more difficult for the fee accountant and later the auditor Effect Some expenditures were not timely made, or supported, and may have been ineligible. The defined contribution plan is underfunded by approximately $12,634. $1,600 was paid for an ineligible employee. Accounting information was not timely submitted to the fee accountant, and when it finally was, it was not in good shape. Unaudited financial statements were not timely produced and thus not timely reviewed by the Board of Commissioners. Cause These are not new issues. Similar findings have been made in the last few years. Questioned Costs $29,986 Recommendation The Board of Commissioners should periodically review the corrections being made to address each of the sub-parts noted above in Context. Most efficient PHAs try to have the complete accounting information sent the fee accountant by the 15th of the following month. View of Responsible Officials and Planned Corrective Action I am Jedidiah Jackson. I was hired as E.D., effective July 1, 2024. We are in the process of addressing the problems noted in the audit, as well as correcting other issues noted by HUD.

Section Eight Housing Choice Voucher Program-CDFA# 14.871, Low Rent Program-CDFA # 14.850, Finding 2023-002-Lack of Adequate Quality Control Regarding Tenant Procedures-Eligibility Criteria and Condition The quality of supervision over tenant file functions, such as calculating tenant rent and Housing Assistance Payments should be timely and sufficient to find errors in calculations or mis-application or mis-understanding of procedures. Context For the Housing Choice Voucher Program, quality control should be timely performed and documented throughout the year. We reviewed twenty-five HCV files. The information was improved over the prior year. In addition, the SEMAP was prepared by an independent consultant. We reviewed the methodology used by the consultant, and reviewed the detail she used on a test basis. The procedures used to compile SEMAP appeared to be proper and sufficient. However, adequate design and operation of internal controls require a periodic representative review of the type of information tested by SEMAP. Documented testes should preferably be done on a monthly basis, and no later than a quarterly basis. The purpose of reviews done monthly or at least quarterly is to detect systemic errors on a timely basis. When SEMAP is done all at one time after year end, the possibility of noting and detecting errors on a timely basis is lost. Effect Errors are not detected and corrected, if necessary, on a timely basis. Questioned Costs None Recommendation SEMAP-like documented checks should be done at least on a quarterly basis. View of Responsible Official I am Jedidiah Jackson. I was hired as E.D., effective July 1, 2024. We are in the process of addressing the problems noted in the audit, as well as correcting other issues noted by HUD.

The person who was the Executive Director for the audit year was hired in June 2018. She passed away on May 21, 2023. A person was hired as Interim Director effective June 1, 2023. Through the date of this report, this person is still the Interim Director. Low Rent Program-CDFA # 14.850, Section Eight Housing Choice Voucher Program-CDFA# 14.871 and Capital Fund-#14.872 Finding 2022-001-Internal Controls Inadequate for Disbursements-Allowable Costs Criteria and Condition Good internal controls should be in place to make sure that disbursements are for eligible payments, are correctly classified, and are timely paid. Good controls ensure that there is proper, documented review of all these functions. Records should be maintained in an order that is conducive to efficient and timely summarizing by the outside fee accounting firm. Unaudited financial statements should be produced on a timely basis, and reviewed by the Board of Commissioners. Context In our original sample of sixty disbursements, ten of the sixty were not supported by invoices or other adequate documentation. In our expanded tests of disbursements, a total of $88,942 of disbursements were not supported by adequate documentation. However, we note that $63,080 of this total of $88,942 was paid to re-occurring vendors such as for fuel for the maintenance trucks, office supplies, refrigerators and stoves for units, and utilities. However, without the proper documentation, it is impossible to be certain that these were business related expenses. Among the $25,862 of unsupported expenses noted above were $4,809 to the then Executive Director. In addition, there was a lack of documented, supervisory review of the invoices or statements by a second party before the disbursements were paid. The Authority’s policy is that two signatures are required for checks. However, we noted several that had only one signature, which was that of the then Executive Director. Accounting information was not sent to the fee accountant for the audit year on a timely basis. According to the fee accountant, March and April 2022 work was not received until September 16, 2022. May and June were not received until October 5th and October 20th. July and August were not received until November 17th and November 23rd. September was not received until December 2. The information was not complete and the unaudited submission to REAC was not made until several months after that. The defined contribution plan is underpaid by a total of approximately $14,000 for the years ending September 30, 2022, 2020, and 2019 (2021 was correct). Other disbursements issues noted include the following: (a)-The General Fund-Low Rent bank account used check vouchers with the same sequence during the year. (b)-For much of the year, the Section Eight bank account used the same sequence as the General Fund. (c)-Several Section Eight HAP checks were paid incorrectly from the General Fund, which required time to tally and reimburse the Section Eight fund. (d)-There were several transfers back and forth between the two funds, which were not always supported and again required time to review. (e)-Duplicate payments were made to vendors. Current Management has corrected for several of these but continues to review others. (f)-Late fees were assessed by vendors (g)-General Fund-Low Rent and Section Eight vouchers were intermixed for much of the year. (h)-General Fund check vouchers were filed alphabetically instead of numerically for most of the year, which made processing much more difficult for the fee accountant and later the auditor (i)-Payroll information was not entered into the software for several months. Effect Some expenditures were not timely made, or supported, and may have been ineligible. The defined contribution plan is underfunded by approximately $14,000. Accounting information was not timely submitted to the fee accountant, and when it finally was, it was not in good shape. Unaudited financial statements were not timely produced and thus not timely reviewed by the Board of Commissioners. Cause These are not new issues. Similar findings have been made in the last few years. Questioned Costs $25,862 Recommendation The Board of Commissioners should periodically review the corrections being made by the Interim Director to address each of the sub-parts noted above in Context. Most efficient PHAs try to have the complete accounting information sent the fee accountant by the 15th of the following month. View of Responsible Officials and Planned Corrective Action I am Youlondar Prevost. As noted above, I was hired as Interim Director on June 1, 2023, which was well after the audit year-end. I am trying to correct all of the issues noted above, as well as to correct items noted by HUD-New Orleans. In addition, I am still working to clear parts of the prior audit findings, noted in another section.

Section Eight Housing Choice Voucher Program-CDFA# 14.871, Low Rent Program-CDFA # 14.850, Finding 2022-002-Lack of Adequate Quality Control Regarding Tenant Procedures-Eligibility Criteria and Condition The quality of supervision over tenant file functions, such as calculating tenant rent and Housing Assistance Payments should be timely and sufficient to find errors in calculations or mis-application or mis-understanding of procedures. Context For the Housing Choice Voucher Program, quality control should be timely performed and documented throughout the year. All of the SEMAP sample answers were Yes, that the error rate in the specified sample size was not exceeded. An outside consultant performed the sample. Since our copy of the SEMAP is not dated, we do not know if the sample was performed before or after the SEMAP submission. However, the consultant noted in her review that errors were noted in the samples for Indicators 1, 2, 3,5,6, 7, and 12. We reviewed twenty-five HCV files. Three had an incorrect payment standard. In all three instances, as a result, the tenant rent and the HAP was incorrect. In another file, the re-examination was past due. We reviewed twelve Low Rent files. Two were past-due for re-examination at audit year end. For four tenants, the rent per the most recent 55058 before September 30, 2022 was different than the rent charged per the rental register. Effect Errors were made in the amounts calculated and used for tenant rents and HAP payments. Cause Quality control checks are not as frequent or as thorough as they should be. This PHA is not large enough to have an Executive Director who just delegates and supervises. The E.D. for a PHA this size has to be at least capable of knowing the Low Rent and Housing Choice Voucher program well enough to check calculations in detail, if he or she is not the front line in doing these calculations. It appears that the last two permanent E.D.s were not capable of this. Questioned Costs None Recommendation We understand that the Authority is in the process of converting to Project Based Accounting. Calculations before or after the conversion need to be timely reviewed and documented. View of Responsible Officials and Planned Corrective Action With the assistance of our consultant, we are trying to correct the errors noted above.

General Fund-Low Rent Program-CDFA#14.850 and Section Eight Housing Fund-CDFA#14.871 Finding 2020-001-Internal Controls Inadequate for Disbursements-Allowable Costs Criteria and Condition 1. In our tests, we noted approximately $5,448 of disbursements that were not supported by invoices or other detail. Unlike last year, only a minimal amount of this appeared to be food or beverages. 2. In addition, we noted approximately $2,990 of disbursements for food and beverages that were adequately supported, but appeared to be excessive. Approximately $1,365 of this was incurred at an off-site retreat for Management and the board of commissioners. 3. We noted two payments to the Authority?s legal counsel that were unsupported. The amounts were for $4,500 and $5,095. In addition, a payment for $2,500 to the same attorney appears to pay invoices and charges that were previously paid. Context We reviewed all credit card statements and all payments to the Executive Director. For the current audit year, the Authority utilized a credit card in the name of the Housing Authority. Management claims that most, if not all, the food and beverages were for staff. We explained in the prior year, when this type of finding first occurred, that to be in accordance with state law [federal law is similar] four tests must be met for food and beverages costs to be allowable. First, there needs to be a written agenda for the in-house staff training. Secondly, there needs to be a written sign-in sheet or some other documentation of who attended the meeting. Third, the reason for the training could not be done early or late in the working day and thus had to be done at the lunch hour needs to be documented. And finally, the costs of the food and beverage needs to be minimum and reasonable. All of the disbursements noted in #s 1 and 2 above originated before June 30, 2020. We discussed this issue with Management in June 2020 when we first noted the unsupported and excessive payments. Effect The above categories total to $20,533. These expenditures, if reviewed by either state or federal authorities, likely would not be allowable. Cause We are not sure why the Executive Director was not aware of the significant limitations on food and beverage disbursements from Authority funds. However, as noted above, these disbursements appeared to end after we discussed this with the Executive Director in June 2020. Questioned Costs None Recommendation Food and drink for the staff should only be purchased when the four criteria noted above are present. Regarding the legal expenses noted, we asked for additional support from Management but we did not receive any. If Management is unable to secure sufficient detail, reimbursement for these amounts should be secured from the paid attorney. Views of Responsible Officials and Planned Corrective Action I am Leatrice Hollis, Executive Director and Designated Person to answer this audit finding. We will do as the auditor suggests.

Section Eight Housing Fund-CDFA #14.871 Finding 2020-002-Insufficient Restricted Cash and Deficit in Unrestricted Net Position-Allowable Costs Criteria and Condition This condition existed before the present Executive Director started in June 2018. The Restricted Net Position balance at September 30, 2020 was $219,679. $173,255 of remaining funds from the DHAP Katrina program, presently reserved for future HUD-designated disaster programs, comprises part of this amount. $46,424 was the balance of the Housing Choice Voucher Program. The total restricted cash was $103,997 with the $115,682 shortage of cash related to the total reserved balance existing in the Housing Choice Voucher Program ($219,679 - $103,997). In addition, the Unrestricted Net Position was a deficit of $14,369. This balance should not show a deficit. A significant issue that continues is that the Housing Choice Voucher Fund has utilized all of the remaining $173,255 of cash left with the DHAP-Katrina Fund. This money is only supposed to be used for designated disaster programs. This occurred before the present Executive Director was hired. Context Cash and investments should be at least equal to the Restricted Net Position. The latter is the amount reserved for payment of Housing Assistance Payments (HAP), per the funding from HUD through the end of the fiscal year. In regards to the Unrestricted Net Position, when a surplus (positive), is the remaining amount that can be paid for non-HAP, administrative expenses. When the number is a deficit (negative), this means that administrative expenses have been paid from funds designated by HUD funding to be used for only HAP payments. Effect The PHA did not have sufficient cash on hand at year-end to pay its obligation for HAP payments, in a prior audit year, due to inadequate forecasting. In addition, the PHA had paid cumulatively to date, September 30, 2020, $14,369 more for administrative expenses from funds not designated for administrative expenses, but instead from funds designated by HUD funding for HAP payments, including in essence also incorrectly borrowing from the $173,255 remaining cash of the DHAP-Katrina Fund. Cause The bottom line answer for the deficit of $14,369 in Unrestricted Equity is that the Authority spent more, in prior years for Administrative Costs (all costs other than Housing Assistance Payments) than HUD allowed the Authority by HUD formula and drawdowns. In years prior to year ended September 30, 2015, part of the reason for the creation of the deficit was that the Authority was under-issued on its vouchers. The funding for administrative increases or decreases rise or fall with the number of issued vouchers. Prior to fiscal year ended 2015, the Authority dealt with a large number of Ports, which increase administrative time, but without funding. Beginning in the year ended September 2016, many of the Ports were absorbed, which somewhat improved the administrative funding, but not enough to offset the administrative costs. HUD was holding reserves of approximately $88,224 at September 30, 2020. Questioned Costs None. Recommendation The Authority hired a new Executive Director, who started in late June 2018. She has reduced expenses. The new E.D. should continue to look for ways to evaluate expenses as to their benefit and necessity. The unrestricted equity deficit was reduced $120,408 for the year ended September 30, 2020, from a deficit of $142,777 to $14,369. Views of Responsible Officials and Planned Corrective Actions We will continue to reduce expenses where it is possible.

General Fund-Low Rent Program-CDFA #14.850 and Section Eight Housing Fund-CDFA #14.871 Finding 2019-001-Internal Controls Inadequate for Disbursements-Allowable Costs Criteria and Condition In our tests, we noted approximately $4,388 of disbursements that were not supported by invoices or other detail. Most of this appears to be food and beverage costs. Also, we noted approximately $4,414 of disbursements that appeared to be for food and beverage costs that were adequately supported, but appeared to excessive. Also, we noted a minimum of $5,993 of travel costs, principally for hotel rooms, that were adequately supported, part of which may be considered excessive. Context We first noted exceptions in our initial sample of disbursements, and also our sample for Other General and Travel Expense. We then reviewed all monthly credit card statements, and also all direct payments to the Executive Director. For some time, it appears that current Management was unable to secure a credit card in the Authority?s name. During that period, the Authority reimbursed the Executive Director for Authority charges on her personal credit card. Management claims that most, if not all, the food and beverage costs were for staff. We explained that to be in accordance with state law (federal law is similar) four tests must be met for food and beverage costs to be allowable. First, there needs to be a written agenda for the in-house staff training. Secondly, there needs to be a written sign-in sheet or some other documentation of who attended the meeting. Third, the reason the training could not be done early or late in the working day and thus had to done at the lunch hour needs to be documented. And finally, the costs of the food and beverage needs to be minimum and reasonable. We requested the above information but received none. In our opinion, most of the food and beverage costs was excessive, although we realize this is subjective. Regarding the travel, the board minutes document that the board was engaged in a significant pending decision for the Authority-whether to adopt RAD, Project-Based Vouchers, or another alternative housing option. It appears that the travel, much of it to D.C. or Atlanta, was likely needed and helpful to those that traveled. Effect The above categories total to approximately $14,795. It appears that much of these funds might have been better utilized in another part of the PHA. However, we note that current Management inherited an Authority with serious financial issues, as noted in Audit Finding 2019-002. The Authority has taken steps to address this situation, including being in the process of converting to Project Based Vouchers. Cause We are not sure why the Executive Director was not aware of the significant limitations on food and beverage disbursements out of Authority funds. Questioned Costs None. Recommendation Food and drink for the staff should only be purchased when the four criteria noted above are present. Regarding travel, as noted above, a significant decision has been made regarding the future housing of the PHA. This may justify the high travel costs of the travel period. However, considering the present financial condition of the Authority, the board should strongly consider limiting out of town travel to that considered absolutely essential. Many trainings and explanations are available on the internet, including the HUD website. When travel is absolutely necessary, the cheapest, reasonable rooms should be secured. Views or Responsible Officials and Planned Corrective Action I am Leatrice Hollis, Executive Director and Designated Person to answer these findings. Morale was very low when I assumed the Director position. We engaged in some meetings that were not trainings in the traditional sense, but were for team and morale building. I think employee relations have improved. However, I am now aware of the requirements and will heed then in the future.

Section Eight Housing Fund ? CFDA #14.871 Finding 2019? 002 ? Insufficient Restricted Cash and Deficit in Unrestricted Net Position ? Allowable Costs Criteria and Condition This condition existed before the present Executive Director started in June 2018. The Restricted Net Position balance at September 30, 2019 was $248,033. $173,255 of remaining funds from the DHAP Katrina program, presently reserved for future HUD-designated disaster programs, comprises part of this amount. $74,778 was the balance of the Housing Choice Voucher Program. The total restricted cash was $74,778 with the $173,255 shortage of cash related to the total reserved balance existing in the Housing Choice Voucher Program ($248,033 - $74,778). In addition, the Unrestricted Net Position was a deficit of $142,477. This balance should not show a deficit. A significant issue that continues is that the Housing Choice Voucher Fund has utilized all of the remaining $173,255 of cash left with the DHAP-Katrina Fund. This money is only supposed to be used for designated disaster programs. Context Cash and investments should be at least equal to the Restricted Net Position. The latter is the amount reserved for payment of Housing Assistance Payments (HAP), per the funding from HUD through the end of the fiscal year. In regards to the Unrestricted Net Position, when a surplus (positive), is the remaining amount that can be paid for non-HAP, administrative expenses. When the number is a deficit (negative), this means that administrative expenses have been paid from funds designated by HUD funding to be used for only HAP payments. Effect The PHA did not have sufficient cash on hand at year-end to pay its obligation for HAP payments, in a prior audit year, due to inadequate forecasting. In addition, the PHA had paid cumulatively to date, September 30, 2019, $142,477 more for administrative expenses from funds not designated for administrative expenses, but instead from funds designated by HUD funding for HAP payments, including in essence also incorrectly borrowing from the $173,255 remaining cash of the DHAP-Katrina Fund. Cause The bottom line answer for the deficit of $142,477 in Unrestricted Equity is that the Authority spent more, in prior years for Administrative Costs (all costs other than Housing Assistance Payments) than HUD allowed the Authority by HUD formula and drawdowns. In years prior to year ended September 30, 2015, part of the reason for the creation of the deficit was that the Authority was under-issued on its vouchers. The funding for administrative increases or decreases rise or fall with the number of issued vouchers. Prior to fiscal year ended 2015, the Authority dealt with a large number of Ports, which increase administrative time, but without funding. Beginning in the year ended September 2016, many of the Ports were absorbed, which somewhat improved the administrative funding, but not enough to offset the administrative costs. HUD was holding reserves of approximately $19,347 at September 30, 2019. Questioned Costs None. Recommendation The Authority hired a new Executive Director, who started in late June 2018. She has reduced expenses. The new E.D. should continue to look for ways to evaluate expenses as to their benefit and necessity. The unrestricted equity deficit was reduced $38,868 for the year ended September 30, 2019. Views of Responsible Officials and Planned Corrective Actions We will continue to reduce expenses where it is possible. As noted above, I, the Executive Director, was retained toward the end of the prior audit year. Also as noted above, the unrestricted equity deficit was reduced $38,868 for the current audit year.

Section Eight Housing Fund-CDFA # 14.871 Finding 2019-003-Errors Noted in HAP Payments, SEMAP Needs Better Documentation-Special Tests Criteria and Condition a) Housing Assistance Payments (HAPs) are calculated at move-in, annual recertification, transfers, and for interim changes. The essential calculation is performed on software. The form that contains the calculation that is transmitted to HUD is the 50058. Other agreements, including the tenant lease and HAP contract, include the tenant rent, HAP payments, and related amounts. In our tests, we noted three instances where the actual HAP paid was different that that figured on the 50058 and the related contracts and agreements noted previously. b) SEMAP regulations state that the SEMAP sample, which is generated and tested by PHA personnel, is to be drawn in an unbiased manner. This was done. The total population or universe is also to be defined. This needs improvement. Indicator One requires testing from the waiting list, and also testing from a list of move-ins. It appears testing was only done from the waiting list. Context a) We reviewed thirty-three tenant files. In three files, we noted that an incorrect HAP payment was made from June 2019 through September 2019. In all three instances, the HAP payment changed in June due to annual recertifications. But the amount paid for the monthly HAP was different and incorrect from June 2019 through September 2019. For the thirty- three tenants tested, the September 2019 HAP payments totaled $22,193. The correct amount that should have been paid was $22,133, a total error of $60. When interpolated to the total HAP payments for the year, the dollar error is approximately an overstatement of $5,500, an amount we consider immaterial. b) SEMAP samples were of adequate size. We also note that the samples were drawn from a random generator program held by the software provider. Thus, it appears that Management met the most crucial tests, that of adequate sample size and to be drawn in an unbiased manner. However, the total population was not defined or delineated in the SEMAP work papers. In addition, Indicator One requires either two samples, or one sample divided in half. We have seen work papers developed by consultants with both methods. One is testing from the waiting list-to determine whether someone was appropriately housed, denied, purged, or still holding on the list. The second method is from a population of move-ins during the period. A tenant could be inappropriately housed, and never appear on the waiting list. Without the second test of strictly from the housed, this exception would never be noted in SEMAP tests. Effect As noted above, the approximate error rate to the total HAPs paid for the year is an immaterial amount of $5,500. Cause The quality control checks did not detect the errors as noted in three tenant files that we tested. We are not aware of the reason. Questioned Costs None. Recommendation Quality control steps should include checking amounts from the 50058 and related agreements to the actual amount paid for the HAP. Regarding SEMAP, in our opinion the personnel is doing an adequate job in this area. The documentation of the population or universe and tweaking of the sample for Indicator One can be enhanced possibly by at least two personnel attending a SEMAP webcast of Nelrod or something similar. We note that at least one webcast was viewed during the audit year. Views of Responsible Officials and Planned Corrective Action We will check from the 50058 to the HAP Register as part of our quality control checks. Two of us will attend a webcast on SEMAP within the next 45 days.

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION

GSA_MIGRATION