Housing Authority of the City of NeedlesLocal Government

Reference Number: 2025-002 Tenant Income Verification Finding: Material Weakness Assistance Listing Number 14.850 Federal Award Number CA16P02250125 Name of Pass-Through Entity Not Applicable COVID-19 Program No Program Title Public Housing Operating Fund Federal Award Year 2025 Condition: The Authority did not maintain documentation of tenant income verification in the tenants’ files provided to the auditors. Criteria 24 CFR 960.259 requires public housing authorities (PHA) to obtain and document in the family file third-party verification of tenant annual income, assets, and expenses related to deductions of annual income. Cause The Authority’s current documentation procedures do not require tenant income verification documentation to be kept in the tenant’s file. Effect or Potential Effect The Authority was not able to demonstrate compliance with the requirements established in 24 CFR 960.259. Questioned Costs None Recommendation The Authority should update its policies and procedures over tenant file documentation to require the inclusion of verified tenant income. Management’s Response Management agrees with the finding. The current procedures will be revised to comply with 24 CFR 960.259 to maintain tenant income verification records in the tenant’s files.

Reference Number: 2025-003 HUD Form 52722 (Calculation of Utilities Expense Level) Reconciliation Finding: Material Weakness Assistance Listing Number 14.850 Federal Award Number CA16P02250125 Name of Pass-Through Entity Not Applicable COVID-19 Program No Program Title Public Housing Operating Fund Federal Award Year 2025 Condition: The Authority did not maintain utility expense documentation that reconciled to the information submitted to HUD on form 52722. Criteria 24 CFR 990.170 requires public housing authorities (PHA) to maintain utility records so that consumption and rate data can be determined. Cause The Authority’s current documentation procedures do not include a reconciliation of the data reported on HUD form 52722 and the underlying utility records. Effect or Potential Effect The Authority was not able to demonstrate compliance with the requirements established in 24 CFR 990.170. Questioned Costs None Recommendation The Authority should update its policies and procedures to include utility records that provide data that records consumption and rates. Management’s Response Management agrees with the finding. The current procedures will be revised to comply with 24 CFR 990.170 to include and maintain utility reconciliation files that incorporate rate and consumption data. The reconciliation will include data reported on HUD form 52722 and how it reconciles to the Housing Authorities financial records.

Reference Number: 2025-004 Depository Agreements Finding: Material Weakness Assistance Listing Number 14.850 Federal Award Number CA16P02250125 Name of Pass-Through Entity Not Applicable COVID-19 Program No Program Title Public Housing Operating Fund Federal Award Year 2025 Condition: The Authority did enter into the required depository agreements using HUD form 51999 over all bank accounts that include program funds under the Annual Contributions Contract (ACC) with HUD. Criteria The ACC requires the Authority to execute depository agreements using HUD form 51999 over all bank accounts that include program funds. Cause The Authority only executed a depository agreement using HUD form 51999 for the bank account that receives deposits from HUD. However, most of the funds are invested in a separate bank account for which there is no depository agreement using HUD form 51999 in place. Effect or Potential Effect The Authority was not in compliance with the requirements established in the ACC. Questioned Costs None Recommendation The Authority should execute depository agreements using HUD form 51999 over all bank accounts that include program funds. Management’s Response Management agrees with the finding. The Authority will execute agreements using HUD form 51999 for the bank accounts that hold monies of the Authority.

Reference Number: 2025-005 Physical Inventory of Program Equipment Finding: Significant Deficiency Assistance Listing Number 14.850 Federal Award Number CA16P02250125 Name of Pass-Through Entity Not Applicable COVID-19 Program No Program Title Public Housing Operating Fund Federal Award Year 2025 Condition: The Authority did not conduct a physical inventory of equipment acquired under the program on a biennial basis. Criteria A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years in accordance with 2 CFR 200.313(d)(2). Cause The Authority’s internal controls over capital assets do not require physical inventory to be performed at least on a biennial basis. Effect or Potential Effect The Authority was not in compliance with the requirements under 2 CFR 200.313(d)(2). Questioned Costs None Recommendation The Authority should update its policies and procedures to require a physical inventory to be performed at least on a biennial basis. Management’s Response Management agrees with the finding. The current procedures and policies will be revised to comply with 2 CFR 200.313(d)(2) to perform a physical inventory at least on a biennial basis.

Unless an extension is approved by HUD, a PHA must obligate at least 90 percent of each Capital Fund grant, including formula grants, DDTF, RHF, and natural disaster grants within 24 months of the funds of becoming available to the PHA for obligation. For emergency grants, including Safety and Security Grants the PHA must obligate at least 90 percent within 12 months of the funds becoming available. The funds become available when the HUD executes the ACC Amendment (24 CFR section 905.306). The Housing Authority did not obligate the funds within the time frame above for CFP Grant Year 2019. The 2019 CFP grant was not obligated within the 24 month allowable period. Due to changes in staff the funds were not obligated properly. The Housing Authority is not incompliance with the CFP grant contract. The Housing Authority should implement internal controls to ensure all funds are obligated within the correct period of time Management Agrees

For modernization projects, the PHA shall submit the AMCC within 90 days after Expenditure End Date. To initiate the closeout process, the PHA shall submit the AMCC which details actual costs incurred between the DOFA date and the completion of the modernization project. During the audit, we noted that the HUD-53001 form was not completed or filed with HUD as required. Multiple grants CFP grants were closed during the year and the required HUD form was not filed. Housing Authority was unaware of the requirement The Authority was in violation of the Federal Regulation relating to report submissions. We recommend that Management implement procedures to ensure compliance with the above regulations as it relates to all federal awards. Management Agrees