CITY OF SUNLAND PARKLocal Government

Federal Program Information: Federal agencies: U.S. Department of Housing and Urban Development and U.S. Department of Homeland Security Titles: Community Development Block Grant, and Homeland Security Program Assistance Listing Numbers: 14.228 and 97.067 Federal Award Identification Number & Year: 21-C-NR-I-01-G-05 (2021), EMW-2022-SS-00044 (2022), EMW-2023-SS-00015 (2023) and EMW-2024-SS-05321 (2024) Questioned Costs: Unknown Statement of Condition – During the audit of the fiscal year ended June 30, 2025, it was noted that the City failed to properly reconcile and present the June 30, 2024 Schedule of Expenditures of Federal Awards (SEFA) to the general ledger and supporting grant records. We noted the following deviations: • Expenditures from a grant amounting to $877,368 for Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) were not reported on the SEFA. • Expenditures from an ongoing project amounting to $26,200 for Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) were not reported on the SEFA. • Expenditures from the annual law enforcement grant, amounting to $66,259 for the Homeland Security Grant Program (ALN 97.067) were not reported on the SEFA. Criteria – Per 2 CFR Section 200.510(b), the auditee must prepare a Schedule of Expenditures of Federal Awards that includes total federal awards expended for each federal program, including prior year expenditures that are adjusted or reconciled. Questioned Costs – Unknown. Effect – The Schedule of Expenditures of Federal Awards for the fiscal year ended June 30, 2024, as reported, was materially misstated. Cause – The City lacks a process for comparing the final audited SEFA to the general ledger and other appropriate supporting grant records prior to submission of the audit report. Recommendation – We recommend the City finance department review the Schedule of Expenditures of Federal Awards and compare the schedule to supporting documents prior to the submission of the audit report. Views of Responsible Officials and Planned Corrective Actions – The following is the City’s correction action plan to resolve the deficiencies noted in this audit finding. 1. Internal Procedures and Training – Establish a year-end closing schedule with clear milestones to ensure all financial records, accruals, and supporting schedules are completed timely for audit. 2. Staff Responsibilities and Training – Assign staff responsibilities for all components of the year-end closing and audit preparation; provide training to ensure accurate and timely completion of required reports. 3. Audit Firm Coordination – Communication expectations with the auditing firm regarding scheduling, deliverables, and responsiveness; require audit timelines and confirmations of availability; include contract language addressing timeliness and accountability. The Finance Director will review progress on a monthly basis, will escalate delays, and document audit firm communications; ensure year-end procedures and audit milestones are met. With the implementation of the corrective action plan, the City believes future audit reports submitted timely and in compliance with OSA requirements. Improved internal coordination and accountability with the auditing firm. Reduced risk of delayed financial reporting to state agencies and stakeholders. Responsible Parties: Finance Director, Finance Staff and City Manager. Estimated Completion Dates: Year-end closing scheduled established by June 30, 2026. Staff training completed by June 30, 2026. Audit firm coordination process implemented: immediately for FY2026 audit. Submission of audit report to OSA by November 28, 2026.

Federal Program Information: Federal agency: U.S. Department of Housing and Urban Development Titles: Public Housing Operating Fund and Public Housing Capital Fund Assistance Listing Numbers: 14.850 and 14.872 Federal Award Identification Number & Year: NM0075-00000124D (2024), NM0075-00000125D (2025) and NM02P017501-23 (2023) Questioned Costs: Unknown Statement of Condition – During the review of the Authority’s HUD reporting requirements, we noted the following deviation: • The Authority’s audited Financial Data Schedule (FDS) for the fiscal year ended June 30, 2024 was submitted to HUD on March 31, 2025. The submission was rejected by HUD. The FDS was resubmitted on July 24, 2025 and was rejected by HUD. As of March 6, 2025, the audited Financial Data Schedule for the fiscal year ended June 30, 2024 has been submitted to HUD but has not been approved by HUD. Criteria – 24 CFR section 902.33, subsection A, states ‘All PHAs must submit their unaudited and audited financial date to HUD on an annual basis. The financial information must be: 1) prepared in accordance with Generally Accepted Accounting Principles (GAAP), as further defined by HUD in supplementary guidance; and 2) submitted electronically in the format prescribed by HUD using the Financial Data Schedule (FDS).’ 24 CFR section 902.33, subsection B, states ‘The unaudited financial information to be submitted to HUD in accordance with paragraph a of this section must be submitted to HUD annually, no later than 2 months after the PHA’s fiscal year end, with no penalty applying until the 16th day of the 3rd month after the PHA’s fiscal year end.’ 24 CFR section 902.33, subsection C, states ‘Audited financial statements will be required no later than 9 months after the PHA’s fiscal year end, in accordance with the Single Audit Act and 2 CFR part 200, subpart F. Questioned Costs – Unknown. Effect – Not complying with rules and regulations established by the U.S. Department of Housing and Urban Development could jeopardize funding from the federal agency. Further, the Authority may have penalties regarding noncompliance with HUD’s rules and regulations. Finally, as per 24 CFR section 902.62, failing to submit the audited financial statements within nine months, the Authority will receive a presumptive rating of failure for the financial condition indicator. Cause – The City staff relied on the prior year audit to complete the process to submit the Financial Data Schedule. Recommendation – The Authority needs to review its procedures concerning the submission of the Financial Data Schedules. The accounting should be completed timely to ensure sufficient time to submit the unaudited and audited Financial Data Schedules. The Authority needs to implement procedures to ensure the submissions have been approved by HUD. Views of Responsible Officials and Planned Corrective Actions – The following is the City’s correction action plan to resolve the deficiencies noted in this audit finding. 1. SEFA Review and Reconciliation Process – Implement a formal process to reconcile the SEFA to the general ledger and all supporting grant documentation before submission of the audit report. Include a review of prior year expenditures and any adjustments or carryovers to ensure completeness and accuracy. 2. Staff Assignment and Training – City Manager to assign designated staff responsible for SEFA preparation and reconciliation. Provide training to assigned staff on 2 CFR Section 200.510(b) requirements and proper SEFA preparation procedures. 3. Internal Review and Approval – Require the Finance Director to review and approve the reconciled SEFA prior to submission with the audit report. Document all reconciliations and approvals as part of the audit file. The City will conduct quarterly review of grant expenditures to ensure they are properly recorded in the general ledger and tracked for SEFA reporting. Make adjustments to internal procedures as needed based on audit findings or changes in federal grant reporting requirements. With the implementation of the corrective action plan, the City believes accurate and complete SEFA submissions in compliance with federal requirements will be created. There will be a reduced risk of material misstatements in federal grant reporting and strengthened internal controls over federal award reporting. Responsible Parties: City Manager, Finance Director and Assigned Staff. Estimated Completion Dates: SEFA reconciliation process established by June 30, 2026. Staff assigned and trained by June 30, 2026. Internal review and approval procedures implemented effective immediately for the FY2026’s Schedule of Expenditures of Federal Awards.

Federal Program Information: Federal agency: U.S. Department of Housing and Urban Development Titles: Public Housing Operating Fund and Public Housing Capital Fund Assistance Listing Numbers: 14.850 and 14.872 Federal Award Identification Number & Year: NM0075-00000124D (2024), NM0075-00000125D (2025) and NM02P017501-23 (2023) Questioned Costs: Unknown Statement of Condition – During the course of our audit, we performed audit tests of the tenant files retained by the Authority. We selected twenty tenant files to test. Our tests revealed the following matters: • Eight instances where the lease agreement was not signed by the tenant co-head or other adults (over eighteen years of age) living in the unit. • Two instances where the lease agreement was not signed by the housing authority representative. • Twenty instances where the tenant’s did not sign their community service form. • Nine instances where there was no tenant signature on the Personal Declaration Form. One of these nine instances included tenants stating the Personal Declaration form does not apply to them. • Twenty-four instances where the tenant did not sign/complete the Release of Information/Federal Privacy Form. • Three instances where the property was not inspected timely. • Three instances where the property inspection form was started, but not completed or signed by the tenant or housing authority representative. • Nine instances where the property inspection form was not signed by the tenant or housing authority representative. • Eight instances where the property inspection form was signed by the tenant but not signed by the housing authority representative. Criteria – The Authority has established policies and procedures regarding the retention of tenant information in order to substantiate eligibility as required by the U.S. Department of Housing and Urban Development (24 CFR sections 5.230, 5.601, 5.609, 5.705, 960.253, 960.255, 960.259 and 960.509). 24 CFR section 5.230 states that ‘as a condition of admission or continued occupancy, the Authority require the tenant and other family members, who is at least 18 years of age, to provide necessary information, documentation, and releases for the PHA to verify income eligibility.’ 24 CFR section 5.601 et seq. states that the Authority ‘determine income eligibility and calculate the tenant’s rent payment using the documentation from third party verification’. Furthermore, 24 CFR sections 960.253, 960.257, and 960.259 states that the Authority ‘reexamine family income and composition at least once every 12 months and adjust the tenant rent and housing assistance payment as necessary using the documentation from third party verification.’ 24 CFR section 5.705 states that ‘An entity responsible for conducting an inspection of HUD housing to determine compliance with this subpart must inspect such housing annually unless specified. An inspection shall be conducted no earlier than six months before and no later than six months after the date marking the anniversary of the previous inspection.’ 24 CFR section 960.509 states that ‘the lease must state: 1) the name of the PHA and names of the tenants, 2) the unit rented (address, apartment number, and any other information needed to identify the dwelling unit), 3) the term of the lease (lease term and renewal), 4) statement of utilities, services, and equipment to be supplied by the PHA without the additional cost, and the utilities and appliances to be paid for by the tenant, and 5) the composition of the household as approved by the PHA (family members, foster children and adults, and any PHA-approved live-in aides). The family must promptly inform the PHA of the birth, adoption, or court-awarded custody of a child. The family must request PHA approval to add any other family member as an occupant of the unit.’ Finally, the Quality Housing and Work Responsibility Act of 1998 requires that ‘all non-exempt public housing adult residents (18 or older) contribute eight (8) hours per month of community service (volunteer work) or participate in eight (8) hours of training, counseling, classes, and other activities which help an individual toward self-sufficiency and economic independence. This is a requirement of the Public Housing Lease.’ Questioned Costs – Unknown. Effect – Not complying with rules and regulations established by the U.S. Department of Housing and Urban Development could jeopardize funding from the federal agency. Further, the Authority may have penalties regarding noncompliance with their rules and regulations. Cause – The Housing Authority’s staff failed to maintain the tenant files in compliance with HUD requirements. Recommendation – The Authority needs to review its procedures concerning their tenant files and documentation retention. All tenant files need to be reviewed to determine what documentation is missing or out of date, if applicable, and the Authority needs to take the appropriate steps to complete the tenant files. Views of Responsible Officials and Planned Corrective Actions – The following is the City’s correction action plan to resolve the deficiencies noted in this audit finding. 1. Track Internal Milestones – Map out critical dates leading up to deadlines, including internal month-end and year-end close out by the auditor. 2. REAC Access – Ensure that the auditing firm has access to necessary portal and does not wait to the last minutes to inquire if access has been granted. The Finance Director will provide access. 3. Plan for System Delays – Anticipate that the REAC system may slow down close to deadlines and plan for earlier inputs to avoid technical delays (auditor). 4. Open Communication with Housing Authority – Auditor and Director of Housing – Ensure that any communication that is sent to the Director of Housing is related to the Finance Director in a timely manner or as soon as it is provided to mentioned Director to avoid any delays in submission. 5. REAC Portal – Director of Housing needs to ensure that they have open communication with HUD and access to deadlines. The City’s housing authority staff will review previous audit findings and ensure all corrective actions have been implemented to avoid repeated deficiencies. If a delay exists, submit an extension request for unaudited date fifteen days prior the deadline, and waiver requests for audited date thirty days prior by the audit firm. With the implementation of the corrective action plan, the City believes there will be an avoidance of troubled designation and timely submission prevents penalties. The city will work towards a successful submission with the allotted time to submit and correct with open communication between the three parties: auditing firm, housing director and finance director. Responsible Parties: Finance Director and Director of Housing. Estimated Completion Dates: Process in place: April 2026 and moving forward. Staff training plan finalized and underway completed by June 30, 2026, to better understand timelines set forth by the Public Housing Authority and the auditing services timelines in place.