Lawton Housing AuthorityLocal Government

Low Rent Program-ALN#14.850 and Housing Choice Voucher Program #14.871- Allowable Costs Finding 2025-001-Interfund Payables Need To Be Reduced Criteria and Condition Funds may not be permanently used and thus transferred between funds. Low Rent funds must ultimately be used for Low Rent purposes, Housing Choice Voucher (HCV) funds used for HCV purposes, etc. Funds may be temporarily loaned in essence, when one fund pays overhead for the other, such as a split payroll. However, the loans should be promptly repaid, and the interfund receivables and payables kept to a minimum and in an evergreen situation. Context The amount owed by the Component Unit to the General Fund has increased from $15,042 at June 30, 2023 to $246,933 at June 30, 2025. In addition, the amount owed by the HCV Fund has increased from $2,774 to $66,457 at June 30, 2025. Effect The risk is increased by the substantial amounts currently owed that the Low Rent program might not be repaid. Thus, ineligible transfers would exist. Cause The current Executive Director assumed this position in December 2025, after year end. The prior E.D. was likely aware that funds exist to repay the balances owed, as noted in View of Responsible Officials below. Questioned Cost None Recommendation Management should continue to review for ways and means to reduce the interfund amounts. Views of Responsible Officials and Planned Corrective Actions I am Anna Richman, Executive Director and Designated Person to answer these findings. As a new E.D., I have only recently become aware of this situation. To reduce the interfund amounts, the avenues we may pursue include but are not limited to the following: Nonfederal funds are maintained in the State and Local Fund. For reporting purposes, this fund is combined with the Low Rent program to comprise the General Fund. We may transfer some of these nonfederal funds to the Component Unit and the HCV Fund to allow them to reduce the interfund loans. Nonfederal funds may be used for this purpose. In addition, we may transfer an increased percentage of the HCV Admin fee to be periodically transferred to the General Fund. We also note that if and when the tangible property of the Veterans Resource Center is ever sold, the funds would revert to the General Fund.

Low Rent Program-ALN#14.850 Finding 2025-002-Internal Control Over Compliance Needs Improvement-Eligibility Criteria and Condition It appears that there was not a representative check of tenant file and waiting list functions by a qualified second party. Auditing Statement of Auditing Standards (SAS) #115 dictates that either “absent or inadequate segregation of duties within a significant account or process” are defined by the Standard as at least a significant deficiency, if not a material weakness. The lack of a documented check noted in the first sentence is considered an inadequate segregation of duties. Context We reviewed twenty-five Low Rent files. We did not note any exceptions. Effect Risk is reduced to an acceptable level that systematic errors are timely detected. Cause Apparent oversight. Recommendation Quality control checks of the waiting list and all tenant file procedures should be timely made and documented. Annual inspections should be done, documented, and available for third party review. Enterprise Income Verification [EIV] should be done, documented and available for third party review. Leases should be redone at least annually. View of Responsible Official We have recently designated

Low Rent-ALN#14.850 Finding 2025-003-Inventory of Maintenance Equipment and Office Furniture Should Be Updated-Special Tests Criteria and Condition Federal regulations require the authority to update its inventory of equipment and office furniture at least every two years. Context A partial inventory was taken early in 2025. However, new management asserts the inventory methods were substandard (we agree). Effect The estimated effect of non-compliance is likely minimal. The office and Maintenance shop have not been moved or remodeled. The E.D. and Procurement officer are aware of the whereabouts of all authority-owned vehicles and who drives them. Cause Oversight by management. Questioned Cost None Recommendation There are various ways to document an update of the inventory. A common method is to tag with a number all items. Small items such as screw drivers can be disregarded. Then, on Excel or something similar, a description such as “Maint Area” is entered on an assigned page, and the numbered items for that area are listed. The inventory should be checked at least every two years. View of Responsible Official We plan to improve our methods and we will take another inventory.

Low Rent Program-CDFA#14.850 and Capital Fund Program-CDFA# 14.872 Finding 2024-001-Non-Compliance With Procurement Policy-Procurement Criteria and Condition All amounts above the Small Purchase Threshold (SMT) should follow the Procurement Policy. Depending on the amount, telephone, email, or written bids may be acceptable. In other instances, depending on the estimated amount of the expenditure, more strict methods are required by both the Authority’s Procurement Policy and also federal regulations regarding procurement. Even when individual expenditure amounts paid are below the SMT, if it is reasonable to assume that similar expenditures through the year will in total exceed the SMT, obtaining other quotes is still required. Context The adherence to policy has improved since this finding was made in the prior year. Each Low Rent manager maintains a book of quotes and comparable prices for the services they procure. However, it appears the following major expenditures were not bid out: $86,764-Cameras and related equipment and support $100,441-Air conditioning replacements, repairs, and maintenance Effect It is possible that similar services might be procured for less dollars. Cause Management asserts that there are few if any other vendors in the Lawton area for the above services, or in the situation of air conditioning, are reliable and prompt. Recommendation As noted above in Context, the authority has improved its solicitation and documentation of efforts to obtain smaller items. For the two noted in the audit finding above, we suggest attempting to obtain quotes in nearby larger towns also. View of Responsible Official I am Rita Love, Executive Director and Designated Person to answer these audit findings. We will comply with the auditor’s recommendation.

Low Rent Program-CDFA#14.850 Finding 2024-002-Internal Control Over Compliance Needs Improvement-Eligibility Criteria and Condition It appears that there was not a representative check of tenant file and waiting list functions by a qualified second party. Auditing Statement of Auditing Standards (SAS) #115 dictates that either “absent or inadequate segregation of duties within a significant account or process” are defined by the Standard as at least a significant deficiency, if not a material weakness. The lack of a documented check noted in the first sentence is considered an inadequate segregation of duties. Context We reviewed twenty-five Low Rent files. For two re-examinations we were unable to review an annual inspection checklist. For one re-examination, we were unable to review an EIV. For three re-examinations, the lease and annual re-certifications were past-due. Effect Lease recertification procedures were deficient in these instances. Cause Apparent oversight. Recommendation Quality control checks of the waiting list and all tenant file procedures should be timely made and documented. Annual inspections should be done, documented, and available for third party review. Enterprise Income Verification [EIV] should be done, documented and available for third party review. Leases should be redone at least annually. View of Responsible Official We will comply with the auditor’s recommendation.

Low Rent-CDFA#14.850 Finding 2024-003-Inventory of Maintenance Equipment and Office Furniture Should Be Updated-Special Tests Criteria and Condition Federal regulations require the authority to update its inventory of equipment and office furniture at least every two years. Context The listing has not been updated in several years. We do note that the ranges, refrigerators, and hot water heaters in each unit are maintained by serial number. Effect The estimated effect of non-compliance is likely minimal. The office and Maintenance shop have not been moved or remodeled. The E.D. and Procurement officer are aware of the whereabouts of all authority-owned vehicles and who drives them. Cause Oversight by management. Questioned Cost None Recommendation There are various ways to document an update of the inventory. A common method is to tag with a number all items. Small items such as screw drivers can be disregarded. Then, on Excel or something similar, a description such as “Maint Area” is entered on an assigned page, and the numbered items for that area are listed. The inventory should be checked at least every two years. View of Responsible Official We will comply with the auditor’s recommendation.

Low Rent Program-CDFA#14.850 Finding 2023-001-Non-Compliance With Procurement Policy-Procurement Criteria and Condition All amounts above the Small Purchase Threshold (SMT) should follow the Procurement Policy. Depending on the amount, telephone, email, or written bids may be acceptable. In other instances, depending on the estimated amount of the expenditure, more strict methods are required by both the Authority’s Procurement Policy and also federal regulations regarding procurement. Even when individual expenditure amounts paid are below the SMT, if it reasonable to assume that similar expenditures through the year will in total exceed the SMT, obtaining other quotes is still required. Context It appears that the Authority did not solicit bids or quotes from other contractors for the following expenditures: (a)-2020 CFP-closed to fixed assets during the year, 39 payments, largest $5,400, 5 different contractors $145,804 (b)-2021 CFP-closed to fixed assets during the year, 64 payments, largest $35,447, most less than $6,000, 6 different contractors $309,734 (c)-Heating-cooling expenditures, 24 payments, largest $2,588, 2 different contractors $23,204 (d)-Landscape and grounds contracts, 28 payments, largest $1,700, 2 different contractors $50,020 (e)-Plumbing, 33 payments, largest $2,099, 2 different contractors $20,726 Effect The possibility of paying more than a reasonable charge was not reduced to a lower level by soliciting quotes for the same service. Management asserts that there are few local contractors that will perform a satisfactory service and do it in a timely manner. Often the service required may not be a technical emergency. Nevertheless, management asserts, the service such as a toilet plumbing issue or the lack of air conditioning, in hot weather is a near emergency. Management asserts that through trial and error, they have determined who can do reliable and timely work. Management asserts that when they are aware of a new entity offering services, they are willing to give the new company a try. Cause It is management’s oversight that quotes were not obtained. Questioned Costs None Recommendation In our audit period, the Authority did not do large, turnkey general contractor jobs. We realize that it is not practical to bid out services rendered for similar services in all instances. For example, as noted above, 64 payments were made for 2021 CFP in the audit period. Many of the 64 were payments for more than one service. However, management should periodically solicit and obtain quotes for representative types of work. Perhaps the easiest is for uniform types of work where problems are not anticipated. The RFP should list the factors considered for the award, with emphasis that price is not the sole determining factor. Then, for this type of uniform work, for subsequent jobs, the Authority could consider not soliciting bids until a reasonable number of jobs were done, or a specified period of lapsed time-six months for example. For some jobs, it is not known what will be encountered until the job is in progress, plumbing being just one example. In these instances, quotes and bids should be obtained on hourly rates. Again, for a specified number of jobs thereafter of a reasonable period of time, quotes would not need to be obtained for subsequent, similar jobs. We reviewed the proof of insurance on the contractors on a heavy basis. We did not note any exceptions. When management is unable to obtain at least three quotes or meet the stricter requirements required by regulations and its Procurement Policy, for larger expenditures, they should document their attempts to obtain quotes from larger, nearby locales. Likely those out- of- town entities will charge more to cover transportation costs and their quotes will not be competitive. They may not meet the need to timely perform requirement. In those instances, the Authority should obtain quotes of what those entities charge in their locale (Wichita Falls, Oklahoma City, etc,) as documentation that what the Authority being charged is reasonable. View of Responsible Official I am Rita Love, Executive Director and Designated Person to answer these audit findings. We will comply with the auditor’s recommendation. (f)-Exterminating, 21 payments, largest $1,400, 2 different contractors $17,740 (g)-Janitorial, 30 payments, largest $13,410 (3 locations-9 months’ service at each location), most in the $2,000 range $65,090 Total $632,318

Low Rent Program-CDFA#14.850 Finding 2023-002-Section III Summary Report Not on File-Reporting Criteria and Condition A Section III Summary Report is required to be prepared annually. Currently it is not required to be sent to HUD. However, it is supposed to be available for third party review. Context Management asserts that they did not prepare the report for the audit year. Effect Federal regulations were not complied with. Cause Oversight by management. Questioned Costs None Recommendation The reports should be timely prepared annually. They should be available for third party review. View of Responsible Official I am Rita Love, Executive Director and Designated Person to answer these audit findings. We will comply with the auditor’s recommendation.

Component Unit-HOME Investment Partnerships Program-CDFA#-14.239 Finding 2022-001-Procurement and Davis Bacon-Special Tests Criteria and Condition During the year, the Authority expended $700,000 of federal HOME funds passed through the City of Lawton on a construction project. The HOME funds were received and the construction in progress was expended in a Component Unit, Lawton Support Services, Inc., which is explained on page 17 of the financial statements. Since the Component Unit does not have its own Procurement Policy, required procedures default to the Housing Authority?s policy. For a construction project that will approximate $700,000, The Authority?s policy calls for competitive sealed bidding procedures. Federal and state requirements also call for these type of bidding procedures, for a project this size. Competitive bids were not sought. For all federal programs, including HOME grants, Davis-Compliance testing must be done, as required by the Wage Rate Requirements (42 USC 12836). Context The Authority obtained ownership of an old USO building in downtown Lawton. With various federal funds, donations and grants, the property was renovated and is now a Veteran?s Resource Center. Management, using in-house experience with renovation costs, determined that a projected renovation cost of $700,000 was reasonable. The contract was awarded to a licensed architect to be the general contractor. The Authority and the City of Lawton are very familiar with the architect?s work. In addition, the architect was instrumental (if not solely responsible) in assisting the Authority in receiving a substantial foundation grant that was also used by the Component Unit. The architect asserts to Management, as a result of this finding, that with the current labor shortage in Lawton, that sub-contractors are all paying above the Davis Bacon minimum wage rate. Therefore, he did not believe it necessary to test the sub-contractor payrolls for compliance. Cause See above Effect Federal procurement regulations were not complied with. We note, however, that the Authority?s Procurement Policy notes the ?award will be made to the lowest responsible and responsive bidder whose bid meets the requirements of the invitation for bids.? In other words, the award would not be made solely on the low bid. Federal regulations require that the responsible party review and test payrolls for Davis Bacon compliance. Questioned Costs None Recommendation In the future, the Authority should comply with its Procurement Policy. Regarding Davis Bacon, we recommend a sampling of sub-contractor payrolls be obtained by the Authority. If any compliance exceptions should be noted by Authority personnel, the sample should be expanded. The testing documentation should be kept for possible third- party review. If there are any compliance exceptions, the Authority should contact the Wage and Hour Division. View of Responsible Official I am Rita Love, Executive Director and Designated Person to answer this finding. We will follow the auditor?s recommendations.