HOUSING AUTHORITY OF THE CITY OF YAKIMA

Compliance requirements: Eligibility; Special Tests and Provisions – Reasonable Rent Determinations Identification as a Repeat Finding: Not a repeat finding Finding: The Authority’s internal controls over tenant files did not consistently prevent or detect and correct missing documentation or errors in Moving to Work Demonstration (MTW) program participants’ eligibility calculations or reasonable rent determinations. Sample Size and Population: We selected 25 Moving-to-Work Demonstration Program housing voucher tenants’ files for testing, out of a population of all participants in the program. Criteria: Public Housing Authorities are required to establish and implement policies and procedures to support compliance with applicable requirements of the Moving-to-Work Demonstration Program. For the special test and provision related to reasonable rent determinations, the 2025 Compliance Supplement requires the Housing Authority to have a reasonable rent policy in place and to implement that policy. Public Housing Authorities are also required to develop uniform Utility Allowance calculations for each unit type and then use that amount consistently across all MTW program participants, in accordance with their MTW Plan. Condition: The Housing Authority has adopted a policy for reasonable rent determinations and has implemented that policy during the year. The Housing Authority has also adopted a schedule of utility allowances for each unit type based on utility usage and updated utility rates in the region. However, the Housing Authority did not consistently follow these policies or schedules based on our testing: • 5 out of the 25 MTW program tenant files selected for testing had rent increases during the year for which reasonable rent determinations were not completed or documented in accordance with the Housing Authority’s established policy. Management subsequently re-performed the reasonable rent determinations for the sampled files and determined that none of the selected tenants’ rents were unreasonable. • 1 out of the 25 tenant files tested included an improperly calculated utility allowance, which resulted in a MTW program participant paying $14 per month in excess of 30% of their adjusted monthly income for five months of the audit year. Management has already contacted the tenant to process a reimbursement for overpayments collected. Cause: The Housing Authority’s tenant file review and monitoring controls were not operating consistently during the year. Although policies and procedures were in place, the review process did not identify all instances in which staff did not fully follow the reasonable rent determination policy or detect incorrect calculations in a tenant’s utility allowance. Effect: Because the Housing Authority did not uniformly apply its reasonable rent policy and did not identify a utility allowance calculation error through its review process, there is an increased risk that tenant files may contain incomplete, inconsistent, or inaccurate compliance documentation. There is also an increased risk that tenant rent calculations may be incorrect and could result in tenants paying more or less than the allowable amount. The reasonable rent exceptions did not result in identified material noncompliance because management re-performed the sampled reasonable rent determinations and concluded that the rents were reasonable. The utility allowance error resulted in a $70 tenant overpayment during the audit period. The error did not result in any known or likely questioned costs. Questioned Costs: None Recommendations: Management should strengthen its tenant file review and monitoring procedures to ensure that reasonable rent determinations and utility allowance calculations are completed, documented, and reviewed in accordance with the Housing Authority’s policies and applicable program requirements. Management Response: Management response is reported in the “Corrective Action Plan” at the end of this report. Contact Person: Lowel Krueger, Executive Director

Late Report Submissions to Federal Audit Clearinghouse and HUD Identification as a Repeat Finding: Not a repeat finding Finding: The Authority did not file its annual 2023 Single Audit and Data Collection Form timely with the Federal Audit Clearinghouse (FAC), and did not file its audited Financial Data Schedule timely with the U.S. Department of Housing and Urban Development (HUD). Criteria: As stated in 2 CFR 200.512(a)(1), the Uniform Guidance requires submission of the Single Audit Reporting Package and Data Collection Form to the FAC nine months after the fiscal year-end. As stated in 24 CFR 902.33(c), HUD requires public housing authorities to submit an audited Financial Data Schedule (FDS) through FASS-PH no later than 9 months after the fiscal year-end. As such, the Authority’s 2023 Single Audit and Data Collection Form submission to the FAC and the audited FDS submission to HUD were both due September 30, 2024. Sample Size and Population: Sampling was not applicable to this finding. Condition: The FAC submission and the audited FDS submission were each filed more than 30 days late. Cause: During 2023, the Authority underwent a major accounting and tenant management software conversion which resulted in delays in completing the Single Audit. Effect: The Authority was non-compliant with Uniform Guidance and HUD reporting deadlines. Late availability of audit information delayed Federal oversight and public transparency. Recommendations: Develop internal controls that provide for month-end and year-end accounting close milestone that include deadlines that will ensure external reporting deadlines are able to be met. Questioned Costs: None Management Response: Management response is reported in the “Corrective Action Plan” at the end of this report. Contact Person: Lowel Kruger, Executive Director

Reporting – Late Report Submissions to Federal Audit Clearinghouse and HUD Identification as a Repeat Finding: Not a repeat finding Federal Awards: 14.881 -HUD Moving to Work Demonstration; 14.195 - HUD Project Based Cluster; 21.027 - Coronavirus State and Local Fiscal Recovery FUnds. Finding: The Authority did not file its annual 2023 Single Audit and Data Collection Form timely with the Federal Audit Clearinghouse (FAC) and did not file its audited Financial Data Schedule timely with the U.S. Department of Housing and Urban Development (HUD). Sample Size and Population: Sampling was not applicable to this finding. Questioned Costs: None Criteria: As stated in 2 CFR 200.512(a)(1), the Uniform Guidance requires submission of the Single Audit Reporting Package and Data Collection Form to the FAC nine months after the fiscal year-end. As stated in 24 CFR 902.33(c), HUD requires public housing authorities to submit an audited Financial Data Schedule (FDS) through FASS-PH no later than 9 months after the fiscal year-end. As such, the Authority’s 2023 Single Audit and Data Collection Form submission to the FAC and the audited FDS submission to HUD were both due September 30, 2024. Condition: The FAC submission and the audited FDS submission were each filed more than 20 days after the due date. Cause: During 2023, the Authority underwent a major accounting and tenant management software conversion which resulted in delays in completing the Single Audit. Effect: • The Authority was non-compliant with Uniform Guidance and HUD reporting deadlines. • Late availability of audit information delayed Federal oversight and public transparency. Recommendations: Develop internal controls that provide for month-end and year-end accounting close milestone that include deadlines that will ensure external reporting deadlines are able to be met. Management Response: Management response is reported in the “Corrective Action Plan” at the end of this report. Contact Person: Lowel Krueger, Executive Director

Reporting – Incomplete Schedule of Expenditures of Federal Awards Identification as a Repeat Finding: Not a repeat finding Federal Awards: 21.027 - Coronavirus State and Local Fiscal REcovery Funds Finding: The Authority did not properly identify proceeds received under a pass-through loan program as including federal award funds under the U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds program, and therefore the loan was improperly excluded from the schedule of expenditures of federal awards (SEFA). Sample Size and Population: Sampling was not applicable to this finding. Questioned Costs: None Criteria: The Authority is required to report all federal awards expended during the audit period on the SEFA. For federal loan programs, federal awards expended include the value of new loans received during the audit period, and the SEFA notes must identify outstanding loan balances at the end of the audit period. 2 CFR § 200.502(a)(3), 2 CFR § 200.502(b)(1), and 2 CFR § 200.510(b)(5). Condition: The Authority’s originally issued 2024 SEFA omitted $2,477,915 of federal expenditures related to a pass-through loan from the Washington State Department of Commerce. The loan included federal funds from the U.S. Department of the Treasury’s Coronavirus State and Local Fiscal Recovery Funds program, Assistance Listing 21.027. The entire federal portion of the loan was drawn during the year ended December 31, 2024, and the outstanding balance of the federal portion of the loan was $2,477,915 at December 31, 2024 and $0 at December 31, 2023. The omission was identified after the original 2024 Single Audit report had been issued Cause: The Authority did not have an effective process to ensure that all departments communicated federal award and loan information to the finance department for SEFA reporting. Effect: The originally issued SEFA was materially understated by $2,477,915, and the SEFA notes omitted the $2,477,915 outstanding federal loan balance at December 31, 2024. The omission affected the major program determination because Assistance Listing 21.027 was not included in the original SEFA or original major program selection. As a result, the originally issued Single Audit reporting package did not include the revised SEFA amounts, did not identify ALN 21.027 as a major program, and did not include auditor testing and reporting over the ALN 21.027 major program. Recommendations: Management should implement procedures to ensure all grant agreements, loan agreements, pass-through award notices, and related amendments are reviewed by the finance department to determine whether they include federal funds. Management should also require communication between project management and finance personnel, perform a year-end reconciliation of loan draws and outstanding balances to the SEFA, and document review of the SEFA and related notes before issuance. Management Response: Management response is reported in the “Corrective Action Plan” at the end of this report. Contact Person: Lowel Krueger, Executive Director

Information on the federal program: Federal Award Identification: ALN.881 Moving to Work Demonstration Program, Federal Agency: Department of Housing and Urban Development, Pass-through entity: N/A. Perspective: During our review of tenant files prepared by management, we performed procedures to audit compliance with program regulations and management controls over compliance. Criteria: The Authority must properly design, implement, and maintain effective internal controls to ensure that program participants are qualified and HUD program regulations are followed. The Authority's administrative plan includes specific procedures for obtaining documentation from third parties to support income reported by voucher holders. The administrative plan also defines circumstances when self certification of income by voucher holders is acceptable. Condition: During the auditor's test of complioance for the 2023 audit, it was noted that there was an exception to the Housing Authority's policy regarding when self-certification of income is permissible. It does not appear that verification of income was attempted prior to accepting self-certification of income. Cause: Management's internal review process did not detect these items in a timely manner. Effect: Income may not be properly verified therefore impacting eligibility and housing assistance payments. Questioned Costs: Known questioned costs were below $25,000. Context: A sample of 25 units were selected. One out of 25 included self certification only for income. Upon follow up with management, they acknowledged another seven additional vocher jolders had a similar fact pattern. Identification as a repeat finding: N/A. Recommendation: We recommend the Authority follow the Administartive Plan's criteria for verification of income through third parties and when self certifications are allowable. Views of Responsible Officials: See Corrective Action Plans.