HOUSING AUTHORITY OF THE TOWN OF ANTHONY, TEXAS

The current Executive Director was hired on December 4, 2024 and inherited the issues that existed at that time. A Disclaimer of Opinion was issued for the year ended September 30, 2024. (d)-The Housing Choice Voucher Program includes a separate program that was established with left over pre 2004 Section Admin fees. This was permissible prior to 2004. With part of the funds, the Program purchased a rent house. The occupant owed the authority $44,723 on a mortgage note that is continually in arrears. If this house was sold, the authority would receive a cash influx of a minimum of $100,000.

(e)-Both the Low Rent and the Housing Choice Voucher Programs have an FSS program. Audit findings have been made for years that management has not properly administered this program. At year end, the HCV Program shows a liability of $53,650 with a corresponding cash account of $53,671. If the actual FSS liability verified by audit was materially correct of, for example, $10,000, the liability account would be substantially reduced. The resulting cash could be transferred to operating.

(f)-The Housing Choice Voucher Program also has a Homeownership program. Audit findings have also been made for years that management has not properly administered this program. At year-end, the HCV Program shows a liability of $59,234 with a corresponding cash account of $59,234. If the actual Homeownership liability verified by audit was materially correct of, for example, $10,000, the liability account would be substantially reduced. The resulting cash could be transferred to operating.

Cause

The lack of due diligence during the management period of the past two Executive Directors, prior to the current one, appears to be the principal reason.

Effect

The authority has severe financial distress.

Recommendation

We have made various recommendations over the years. This year’s are reflected in the View of Responsible Officials presented below.

View of Responsible Official

I am Louie Alfaro, Executive Director and Designated Person to answer these findings. As noted above, I did not become E.D. until December 4, 2024. I will take the following proposed steps to the board of commissioners for approval. The steps coincide with (a) through (f) noted in Condition Found.

(a) and (b)-We will continue minimize expenses when possible, to eliminate the deficits and reduce the interfund balances noted above. (c)-I understand the auditor has talked with and communicated in writing with REAC and the HUD Albuquerque Field Office regarding the CARES Act liability of $126,982 noted in (c) above. It appears HUD regulations permit a report to be filed after the deadline for expenditures. If HUD will accept and approve this report, I will request the fee accountant or other third party to determine which 2020 and 2021 Admin and Other Costs should have been timely identified with the CARES Act funds. I understand this may result in an additional fee, due to the difficulty of obtaining and reviewing the old records. Then, after review upon audit, I understand that the liability would be eliminated.

(d)-I will review whether the note receivable on the rent house noted in (d) above is current. If past-due, I will consult with our attorney about avenues to foreclosure.

(e)-As of mid-September 2026, we feel we have the FSS program administered properly for the Low Rent program. Principally due to lack of available man hours, we are still behind in bringing the FSS program for Housing Choice Vouchers up to date. We are working on it as time permits.

(f)-As of mid-September 2026, we believe we have determined the estimate amounts owed to 8 FSS participants. However, how to bring this to resolution has not been resolved, since all 8 were ported out to El Paso Homes (El Paso Housing Authority) over a year ago.

Presently, we are considering three alternatives: (a)-pay the participants in full or in part, but here are legal issues with that, (b)-establish parameters for items we will reimburse the participants-new stoves, etc., (c)-agree to a Memorandum of Understanding with El Paso Homes.

We have requested a meeting with El Paso Homes to discuss the issues and a possible MOU, but they have yet to agree to a meeting.

Low Rent Housing Program ALN# 14.850 and Housing Choice Voucher Program ALN# 14.871

2025-001-Financial Distress, Interfund Balances and Management’s Plans-Allowable Costs

Criteria and Specific Requirement

(a)-It is often impractical for an entity with multiple funds to each disburse funds for payroll and common bills. Interfund balances may exist, as long as they are kept small, and capable of being paid and zeroed out on a short-term notice.

(b)-Expenses should be monitored sufficiently to keep equity balances of a positive amount.

(c)-CARES Act Funds and other grants should be kept up to date, as to matching expenditures with federal advances.

Condition Found

(a)-The General Fund, which includes the Low Rent Program, owes the Housing Choice Voucher Program $265,569. As the Statement of Financial Position discloses, if this interfund balance was paid in full at year-end, the General Fund would only have current assets of $26,200.

Conversely, the Housing Choice Voucher has an interfund receivable of $265,569 for which the collection of the majority of this balance is doubtful.

(b)-At year-end, the Housing Choice Voucher Fund has a restricted HAP equity of $251,034. This balance is calculated by the cumulative portion of the HAP federal advances designated to pay HAP payments, less the actual HAP payments made. The fund should have a minimum of $251,034 of cash on hand to pay HAP payments. Instead, the Housing Choice Voucher Fund shows an overdraft of $141,044.

(c)-The Housing Choice Voucher Fund includes an accounts payable to HUD for $126,982 of CARES Act funds. The authority received $66,018 and $60,964 on August 13 and September 1, respectively in 2020. The authority’s fee accountant repeatedly asked the Executive Director serving then to identify the 2020 and 2021 Admin or other costs that these CARES Act funds paid for. She would not do it. Consequently, HUD considers these funds to be due to HUD.

Low Rent Housing Program ALN# 14.850 and Housing Choice Voucher Program ALN# 14.871

2025-002-Administration of the Homeownership Program and FSS Programs-Need Improvement-Special Tests

Criteria

The Low Rent and Housing Choice Voucher Programs both participate in the FSS programs. Federal regulations dictate how the FSS program should work. Enrollees have a choice of goals to accomplish and thus graduate with FSS funds. The Authority should keep documentation that the FSS program has been offered to all new participants, as long as the program exists.

The Homeownership program was established years ago from excess Admin fees of the program, which was permitted from the pre-2004 Admin fees. Condition

FSS

For years, an audit finding noted that this program was not adequately monitored. Beginning in mid -2024, after the new E.D. and a new employee was hired, the authority improved administration of the program. However, there is no established liability of the authority at year-end.

Homeownership

For years, an audit finding has noted that this program is not adequately monitored. Old paperwork suggests that approximately 8 tenants may have at one time been enlisted. However, with multiple E.D.s and employees, plus the port-out of all but one of the potential enrollees, the paperwork is inadequate.

Cause

As noted, there has been employee turnover and no emphasis by prior management to properly administer the programs.

Effect

The federal regulations that apply to administering these programs have not been complied with.

Recommendation

For the FSS program, the liability as of September 30, 2025 should be determined.

Regarding the Homeownership program, we have recommended that the Board establish a policy for which expenditures will be paid to the tenant, for those that provide proof they were enrolled in the program.

View of Responsible Official

As noted in Finding 2025-001, I have agreed to this recommendation.

Section 8 Housing Choice Voucher Program-ALN #14.871

2025-003-Lack of quality control and SEMAP-Eligibility and Special Tests

Criteria and Specific Requirement

The waiting list, tenant file functions, and quality control should be documented.

Condition Found

The tenant files and waiting list were much improved over the prior year, for which numerous exceptions were noted. However, we did note the following:

(a)-SEMAP was apparently not prepared by prior management. SEMAP is required by HUD regulations. This is a documentation that quality control was performed, broken down into subsets. Even if SEMAP was not required by HUD, at least similar documented quality control should be done and available for third party review. Statement of Auditing Standard #115, which auditors must follow, states “absent or inadequate segregation of duties within a significant account or process” is defined by the Standard as at least a significant deficiency or material weakness. Either require an audit finding.

(b)-It appears that quality control inspections were not done.

(c)-It appears that the last utility allowance review was done in August 2023. Federal regulations require that utility allowances be done annually. At least when any one category changes more than 10% since the last review, the allowances must be revised.

Cause

Apparent oversight.

Effect

Federal regulations were not complied with.

Recommendation

We have discussed the particulars with management. We have also furnished them with blank forms to complete the filing.

View of responsible official

We will comply with the auditor’s recommendation.

Low Rent Housing Program ALN# 14.850 and Housing Choice Voucher Program ALN# 14.871

2025-004-Reporting Deadline Not Met-Reporting

Criteria and Specific Requirement

Federal regulations should be filed no later than nine months after the end of the fiscal year, or June 30, 2026.

Condition Found

The audit report is being filed beyond the due date.

Cause

Records were not received in sufficient time, in our opinion, to enable the auditor to finalize the audit report by June 30, 2026.

Effect

Federal regulations were not complied with.

Recommendation

The audit report should be timely filed.

View of Responsible Official

We will comply with the auditor’s recommendation.

Section 8 Housing Choice Voucher Program-CDFA#14.871, Low Rent Program-CDFA#14.850, Capital Fund Program-CDFA#14.872

The Executive Director for the audit year was terminated October 31, 2024. The current Executive Director was hired December 4, 2024.

2024-001-Inadequate Accounting and Documentation-Allowable Costs/Principles and Reporting

Criteria and Specific Requirement

Internal controls should exist that allow the production and retention of accounting information that is properly recorded in accordance with generally accepted accounting practices. Disbursements should be properly authorized. Supporting data for each disbursement should be sufficient and available for third party review.

(a)-Federal regulations require that certain financial data required by REAC be supported and documented

(b)-Various CFPs, CARES Act, and other grants should be properly classified and accounted for

(c)-Sufficient information should be submitted to the outside employed fee accountant to allow the latter to complete a year-end documentary checklist that all points considered by the fee accountant have been adequately addressed

Condition Found

The outside fee accountant delivered a letter dated November 30, 2024 that outlined the significant issues that management needed to address before the fee accountant could sign off on their year- end checklist regarding the unaudited financial statements. The fee accountant never received the information that would allow them to sign this checklist. With the accompanying daily operational issues the new Executive Director encountered, he was unable to give sufficient attention to the issues noted by the fee accountant, as outlined in their November letter.

The financial statements were misstated, including the following:

(a)-The Housing Check Voucher operating bank statement reflects an overdraft of $195,295, which includes approximately $252,818 of outstanding checks. These checks were dated from February 1, 2022 through September 1, 2024. Only $45,768 of these checks were dated from July 20, 2024 forward. (b)-The accounting records reflect an account payable of $255,086 for the General Fund- Low Rent program, owed to the HCV Program. $ 88,324 of this amount consists of Ross Grant funds received by the Low Rent program that should have been utilized by the Housing Choice Voucher (HCV) Program. The accounting records reflect that the remaining balance is owed to the HCV Program for various expenses, principally $76,700 for payroll and $39,500 for software. This $255,086 is incorrectly reflected as accounts payable, instead of interfund due to the HCV Program. The HCV program incorrectly shows an accounts receivable of $42,859, which is coded as only part of the $88,324 (see above), owed to HCV by the Low Rent Program. Instead of payables and receivables, these amounts due to HCV Program by the Low Rent program should be reflected as interfund receivables and payables, and the amount should equal.

(c)-At September 30, 2024, the Authority had fully expended recent Ross Grants of $39,045 and $57,394. On September 23, 2024 the bank statement reflected a deposit of $41,144 labeled “HUD ROSS.” Management has been unable to give us a copy of the original grant agreement or other details of this grant.

(d)-The HCV Program paid $3,131,825 in electronic payments. The Low Rent Program, via the General Fund, paid $15,009 in electronic payments. It appears the type of written second approval that we have recommended for multiple years was not used. Only the Executive Director appears to have initiated and completed these purchases. We were unable to review the supporting detail such as invoices or statements, except for 9 of 296 transactions in the HCV Program that totaled $1,721 and 16 of 78 in the Low Rent program that totaled $5,310.

We note that almost all Authority expenses were paid in this manner. This includes payroll, HAP payments, and utilities. We noted payments coded mainly to Contract Materials that were paid to Walmart, Amazon, Sam’s Club, and Pilot. Travel expenses appear to be unusually high for a small, financially trouble Authority.

(e)-Government Accounting Standards Bulletin (GASB) 96, a relatively new pronouncement, addresses subscription-based technology arrangements. The Authority utilizes a subscription software that performs various functions related to tenant files, waiting lists, and various reports to HUD. Since the Authority’s current agreement is for multiple years, a significant accounting adjustment should have been recorded on the general ledger, but was not.

(f)-As detailed in Note 11 of the financial statements, the Authority participates in a Simplified Pension Plan (SEP). We have requested in prior years from management a copy of the board resolution, or some other documentation, that details the percentage to be contributed. We have still not received that documentation. Prior management claimed this percentage to be 8%.

(g)-The fee accountant in their November 2024 letter requested clarification of $126,982 of deferred CARES Act funds. We believe this deferred amount is in error on the financial statements. In our opinion, $60,964 should have been reported as Admin and Tenant Services salaries for the audit year September 30, 2020. The remaining CARES Act funding of $66,018 should been reported as Tenant Services salaries for the years ended September 30, 2020 and 2021.

Cause

The lack of due diligence by prior management appears to be the principal reason.

Effect

Various accounts are misstated.

Recommendation

In our opinion, all of the following should be done before the unaudited financial statements are submitted to REAC for the year ended September 30, 2025. Our recommendations to the various subparts are as follows:

(a)-Using the most recent bank reconciliation, all of the outstanding checks dated before audit year end, September 30, 2024, should be voided. In addition, management should consider voiding any checks older than six months, again using the most recent bank reconciliation. If from a scan, management believes some of the old outstanding checks are valid, the vendors should be promptly contacted. If management subsequently is contacted by a vendor for which an old outstanding check was voided, if the paperwork shows the vendor is properly owed its claim, a new check should be promptly issued.

We recommend that the fee accountant consider a prior period adjustment for any checks written off dated on or before September 30, 2024. For charges in the current year, for voided checks, the charges should be reversed.

(b)-The unaudited accounting information showed only an aggregate figure that approximated the ending payable of $255,096 owed by the Low Rent Program, but without any detail. We were able to detail this amount ourselves to a $924 unreconciled balance. Management should review this detail again. The amount should be reclassified to interfund due HCV. If the amount is still deemed materially correct, the fee accountant should consider adjusting the reclassifying the $42,859 accounts receivable to interfund, and adjusting the interfund balance to the same amount reflected by Low Rent. In our opinion, a prior period adjustment should be considered. Cash should be transferred if possible between the programs, and the interfund should be reduced as much as possible.

(c)-Management should contact HUD if necessary to obtain the grant information for the $41,144 Ross grant deposit. (d)-If the authority chooses to continue electronic payments, an approval form should be co-signed by a second party, as we have recommended in prior years. A copy of the invoice must be retained, available for not only the co-approval person, but also for third parties. All HCV Programs have a similar process for determining each month’s HAP checks. This involves, starting with the prior month list, then adding and deleting, including possible abatements. A second person should document their review of the HAP list before it is finalized.

(e)-Management should contract with the fee accountant to make the necessary adjusting journal entries, to reflect proper compliance with GASB 96.

(f)-If the terms of contribution to the SEP are not found in writing my management (or even if they are), management should note by board resolution what the percentage of contribution of the Authority will be in the future.

(g)-It appears that no future action is needed.

View of Responsible Official

I am Louis Alfaro, Executive Director and Designated Person to answer these findings. We will comply with the auditor’s recommendation. As noted above, I did not become Executive Director until after this audit period.

Section 8 Housing Choice Voucher Program-CDFA #14.871, Low Rent Program-CDFA#14.850

2024-002-Administration of the Homeownership Program and FSS Programs Need Improvement-Special Tests

Criteria and Specific Requirement

The Low Rent Program and the Housing Choice Voucher Program both participate in the FSS programs. Federal regulations dictate how the FSS program should work. Enrollees have a choice of goals to accomplish and thus graduate with FSS funds. The Authority should keep documentation that the FSS program was offered to all new participants.

In addition, the Homeownership program was established years ago from excess Admin fees of the HCV program, when this was still permitted from pre-2004 Admin fees. An escrow “major repair or replacement” account was maintained for each participant, with the authority calculating monthly additions based on formula. If participants presented documentation of major expenditures or additions, they could be reimbursed from the established escrow accounts. An audit finding has existed for years that neither the FSS or Homeownership programs were being properly administered.

Condition Found

FSS

A recently hired case worker is adequately tracking three participants in the program. However, two participants have graduated. They should be notified that they are due funds if they elect to draw them now. The liability to the two tenants at September 30, 2024 is a total of $3,976. In addition, there is no documentation in the files that recent new people to the program were made aware that if they chose to, they could participate in the program

Homeownership

For the last several years, the various E.D.s have asserted that they were behind in updating the status of Homeownership participants. They provided no lists of enrollees. However, in the current audit period, a case worker has found a list dated September 30, 2015 of 13 participants. A review has found an additional enrollee. The review has determined that of the 14 total, 6 are no longer on the program. The status of the other eight is presently not known.

Cause

All of the reasons, perhaps even the principal reason, are not known for the inadequate administration. However, case worker turnover and lack of training is partly responsible. In addition, management has not been diligent in overseeing these programs.

Effect

Two of the effects are that federal regulations for FSS and the Authority -established Homeownership policy have not been complied with.

Recommendation

FSS

It appears that the current case workers overseeing the FSS programs are adequately tracking the enrollees. However, documentation in writing should be obtained that the two tenants eligible for funds should be notified. In addition, for all future move-ins, and at least at time of annual renewal, documentation should be obtained that all participants are informed that they are eligible for the FSS program. Finally, a quality control check by someone other than the two caseworkers needs to be documented. Or, each case worker can check the other and document this check.

Homeownership

(a)-The board’s adopted, original policy is no longer available. In addition, due to the comingling of funds, inadequate accounting and perhaps other reasons, the original amount of money contributed to the program, and any remaining funds is not known. Due to these factors, the Authority should consider the program to have been suspended and/or terminated as of September 2015. This is the date of the last participant update recently found by the case worker, as noted in Condition Found, noted above.

(b)-Of the 8 participant files that are open, as noted in Condition Found, a review for participant contracts should be made. Since 7 of the files have been ported out to the El Paso Housing Authority, likely arrangements will need to be made for an Anthony case worker to review the files in El Paso.

(c)-If any contracts are found, they should be carefully reviewed by the case worker and also management, and furnished to the auditor of the applicable audit year.

(d)-For any of the 8 participants with properly executed contracts, the Authority should consider adding interest to the September 30, 2015 escrow balance of 3% per annum from October 1, 2015 through the most recent date.

(e)- The participant with contracts should be notified in writing of their escrow balance. Since the EPHA now handles these tenants, communications will need to worked out. The participants should be informed that for major expenditures or additions (or other expenses, as determined by the board, as long as they are consistently applied) they can be reimbursed

Our recommendation could vary from the above, depending on what the terms of the original participant agreement says, if such an agreement is found. Also, HUD or legal counsel, if sought, may have other recommendations.

View of Responsible Officials

We will review all of the above at our next board meeting. But initially, I agree with the above recommendations.

Section 8 Housing Choice Voucher Program-CDFA #14.871

2024-003-Lack of quality control and SEMAP-Eligibility and Special Tests

Criteria and Specific Requirement

The waiting list, tenant file functions, and quality control should be documented.

Condition Found

The tenant files and waiting list were much improved over the prior year, for which numerous exceptions were noted. However, we did note the following:

(a)-SEMAP was apparently not prepared by prior management. SEMAP is required by HUD regulations. This is a documentation that quality control was performed, broken down into subsets. Even if SEMAP was not required by HUD, at least similar documented quality control should be done and available for third party review. Statement of Auditing Standard #115, which auditors must follow, states “absent or inadequate segregation of duties within a significant account or process” is defined by the Standard as at least a significant deficiency or material weakness. Either require an audit finding.

(b)-It appears that quality control inspections were not done.

(c)-It appears that the last utility allowance review was done in August 2023. Federal regulations require that utility allowances be done annually. At least when any one category changes more than 10% since the last review, the allowances must be revised.

Cause

Apparent oversight.

Effect

Federal regulations were not complied with.

Recommendation

We have discussed the particulars with management. We have also furnished them with blank forms to complete the filing. View of responsible official

We will comply with the auditor’s recommendation.

Section 8 Housing Choice Voucher Program-CDFA#14.871, Low Rent Program-CDFA#14.872 and Capital Fund Program-CDFA#14.872

2024-005-Reporting Deadline Not Met-Reporting

Criteria and Specific Requirement

Federal regulations should be filed no later than nine months after the end of the fiscal year, or June 30, 2025. Condition Found

The audit report is being filed beyond the due date.

Cause

The new Executive Director had difficulty in securing an auditor. The audit contract was not executed until May 16, 2025. Accounting records were not received by the auditor until a few weeks later.

Effect

Federal regulations were not complied with.

Recommendation

The audit report should be timely filed.

View of Responsible Official

We will comply with the auditor’s recommendation.

Section 8 Housing Choice Voucher Program-CDFA#14.871, Low Rent Program-CDFA#14.850

2023-001-Inadequate Accounting and Documentation-Allowable Costs/Principles

Criteria and Specific Requirement

(a)-Travel expenses should be correctly classified.

(b)-Direct payments (ACH- no check) should be properly authorized and supported.

(c)-Credits on the Low Rent rental register should be adequately documented. In addition, the rental registers should be reviewed each month before closeout.

(d)-Federal regulations require that certain financial data required by REAC be supported and documented

(e)-Various CFPs and other grants should be properly classified and accounted for

(f)-Sufficient information should be submitted to the outside employed fee accountant to allow the latter to complete a year-end documentary checklist that all points considered by the fee accountant have been adequately addressed

Condition Found

(a)-We noted $4,334 of travel costs that were improperly classified in either Maintenance Expense-Materials or Other Administrative Expenses-Other. The above amounts were reclassified by audit adjustment to travel costs.

(b)-The adopted policy is for direct payments (ACH- without check) to be accompanied by an authorized check request. As a result of early exceptions we noted, we reviewed approximately 100% of the noted direct payments. Only a minority of the direct payments that we reviewed were accompanied by such an authorized written request. In addition, we do not know the documentation or explanation that was viewed by the authorized person, when the requests that we were able to review was signed.

Approximately $55,051 of total payments were made by direct payments. $34,334 and $20,717 were charged to the HCV Fund and the General (Low Rent) Funds, respectively. $49,974 of the total was not supported by adequate documentation. This was $31,586 and $18,388 charged to the HCV and General (Low Rent) Funds, respectively. Much of the unsupported direct payments were travel costs. The total travel costs after reclassifications noted above were $21,336. Of the total travel costs, only $2,723 was paid by check. All tested check amounts contained adequate support. $18,613 of travel costs were paid by direct payments.

(c)-We selected three credits at random on the Low Rent rental register that totaled $4,361 that was spread over three months. We requested documented explanations from management for these credits. However, we did not receive any.

In addition, we noted in our review of month- to- month Low Rent rental revenue charged, that there was a large variance that may have not been initially detected by management. The average dwelling rent charged for 10 months was $5,800. However, the rent charged for January and February 2023 were $10,855 and $1,570, respectively.

We received the accounting information without adjustment or comment on this. Management states that they subsequently found the errors. However, the January variance should have been noted by management before the February rent register was run.

(d)-The unaudited financial statements were conditionally approved by REAC. One of the conditions was that PORTs reported on the VMS was $6,009. However, the amount reported on Financial Data Scheule (FDS) Line 97350 is zero. While this difference is immaterial to the financial statements, REAC expects these numbers to agree. To date, management has been unable to reconcile these numbers.

(e)-In the current year, Accounting coded a $38,573 advance to a ROSS grant. However, the detailed ELOCCS indicates this is instead was an advance on the CFP 2020 program.

In addition, a $46,710 advance was incorrectly classified to the 2021 CFP. Instead, it should have been credited to the 2019 CFP program.

(f)-The fee accountant only partially completed their year- end unaudited checklist, that is prepared by a supervising accountant that reviews the year-end unaudited statements prepared by other members of the fee accounting firm. The fee accountant requested but did not receive the necessary information from management.

Cause

Unknown. Effect

Federal regulations were not complied with. In addition, the accounting information is not as accurate as it should be.

Recommendation to prevent future occurrences

Management should ensure that the above inadequacies are corrected. Internal controls over all of these areas should be improved.

View of Responsible Official

We will comply with the auditor’s recommendation. I do note that we were short of personnel for the entire audit period. I believe that I have staff presently that can do most of the assigned duties. I admit that not all of the deficiencies noted were due to being understaffed, but lack of training (being new to HUD) and understanding. But we will also correct those errors to the best of our ability.

Section 8 Housing Choice Voucher Program-CDFA#14.871, Low Rent Program-CDFA#14.850

2023-002-Inadequate Administration of Facets of Programs-Allowable Costs/Principles

Criteria and specific requirement

(a)-Both the Low Rent and Housing Choice Voucher Plans participate in the Family Self-Sufficiency (FSS) programs. Various tenants participate in the program. Various HUD-approved goals for personal improvement are established. Authority personnel help the participants set the objectives and time frames for accomplishing the goals. Authority personnel counsel the participants and track their progress. If the goals are timely met, the escrowed funds are disbursed to the participant. If the goals are not timely met, the escrowed amount is forfeited by the authority.

(b)-Funds are earned by participants who meet goals established similarly to the FSS program noted above in the Family Self Sufficiency Program. This program was established years ago from excess Admin fees of the HCV program, at a time when this was still permitted. The funds are referred to as Homeownership Set Aside funds.

(c)-As noted in Note 11, Retirement System, the authority participates in a Simplified Pension Plan (SEP). $17,722 was contributed to the Plan during the audit year. We requested a copy of the Master Plan, but we have not received it. Also, we requested a breakdown of how the $17,722 was calculated, and to which participant(s) this money had been credited to. We have not received that.

Condition Found

(a) and (b)-It appears the enrollment, progress of participants to meet the established goals, and potential earning and disbursement of FSS and Set Aside funds have been inadequately monitored for at least the last two years.(c)-Without both of these requested items noted above, we are unable to determine if the SEP contribution terms were adequately complied with.

Cause

It appears that the authority has not retained adequate personnel to oversee the FSS and Set Aside tracking. We do not know why we have not received the SEP information.

Effect

The federal regulations for FSS and Set Aside tracking has not been complied with. In addition, it is possible the terms of ERISA (Employers Retirement Income Security Act) may have not been complied with, in some respects.

Recommendation to prevent future occurrences

Personnel should be trained in the FSS and Homeownership programs. They should adequately track and administer the program. The SEP provisions should be complied with in all material respects.

View of Responsible Officials

We will comply with the auditor’s recommendation. I do note that we were short of personnel for the entire audit period. I believe that I have staff presently that can do most of the assigned duties. I admit that not all of the deficiencies noted were due to being understaffed, but lack of training (being new to HUD) and understanding. But we will also correct those errors to the best of our ability.

Section 8 Housing Choice Voucher Program-CDFA #14.871, Low Rent Program CDFA#14.850

2023-003-Tenant file deficiencies and SEMAP errors noted-Eligibility and Special Tests

Criteria and Specific Requirement

(a)-SEMAP should be timely filed and properly documented

(b)-Tenants who moved in during the audit year should be found on the waiting list. In addition, the waiting lists should contain explanations of why the applicants listed before (above) the admitted tested tenant was not admitted instead of the applicant who was.

(c)-HAP payments should be the same amount of expenditure as listed on the last 50058 before the HAP payment is disbursed

(d)-Reasonable rent comparisons should be made for all Move Ins(e)-Income Enterprise Verifications (EIV) should be documented for all tenants when their annual re-examination is done

(f)-All 1099’s issued to landlords should be available for third party review.

Condition Found

(a)-SEMAP was not filed before the regulatory deadline. Since the deadline was missed, the SEMAP could not be submitted.

We requested the worksheets used to document SEMAP. management brought in the files that they claim were used to review for SEMAP. the other thing available were twenty inspection forms that management claims were HQ’s. We were unable to determine whether the HQ’s covered both failed and passed initial inspections.

Again, no worksheets were available to document the results of the tests. in the last two audit periods, we gave examples and explanations to management of an adequate way to document SEMAP. We recommended a couple of webcasts to attend on SEMAP.

Management claims they viewed the webcasts.

(b)-We reviewed twenty-five HCV files. Nine were current year move ins. sixteen were annual re-exams. Of the nine move ins tested, we could not locate three on the waiting lists (we asked management three weeks before we reviewed the files to tab the waiting list for the tested move ins). In addition, of one of the six that we did locate on the waiting list, we could not find an explanation of why the applicants listed before (above) were not admitted.

We reviewed two move-ins for low rent, a non-major program. We located the applicants on the waiting list. however, there was no explanation why the applicants listed before (above) were not admitted.

(c)-Of the twenty -five HCV files tested, the September 2023 HAP payment did not agree to the last available 50058 filed before September for two tenants. We asked if there were possibly interim 50058s that did not make it to the file, but we did not receive any. two were immaterial differences-one being $9 per month, the other $3 per month.

(d)-Of the nine move-ins tested, we could not locate a reasonable rent survey for two.

(e)-Of the sixteen re-exams we reviewed, we could not find an EIV for the re-exam of one tenant.(f)-We were unable to agree the names of several landlords to 1099’s issued in their name or to a DBA (doing business as).

Cause

Unknown

Effect

Controls over the admittance process, calculation of HAP payments, and other facets of eligibility and occupancy are not as strong as they should be.

Recommendation to prevent future occurrences

The above inadequacies should be corrected. Suggested improved procedures and internal controls have been discussed with management in prior audits.

View of responsible official

We will comply with the auditor’s recommendation. I do note that we were short of personnel for the entire audit period. I believe that I have staff presently that can do most of the assigned duties. I admit that not all of the deficiencies noted were due to being understaffed, but lack of training (being new to HUD) and understanding. But we will also correct those errors to the best of our ability.

Section 8 Housing Choice Voucher Program-CDFA#14.871, Low Rent Program-CDFA#14.850

2023-004-Significantly large interfund account needs to be reduced-Allowable Costs/Principles

Criteria and specific requirement

In small and medium-sized PHAs, there is a required allocation of expenses between programs. It is often not practical to maintain separate bank accounts and pay each program’s expenses out of its individual bank account.

As a result, usually there are interfund payables and receivables between the accounts/programs. Ideally, the interfund amounts should be kept to a minimal amount, if not paid in full at the start of every month.

The danger is that the larger the interfund amount is and/or grows, the more difficult it may be to pay off the interfund payable amount. The practical effect is if this happens, one fund is paying the expenses of another fund on a permanent basis. This results in a “transfer” between the Housing Choice Voucher and Low Rent programs, which federal regulations do not allow.Condition Found

At September 30, 2023, the Low Rent Program owes the Housing Choice Voucher Program $71,428.

Context

The significant interfund balance has existed for several years. We note that it was substantially reduced in the audit year, from $165,833 to $71,428.

Cause

Apparent oversight.

Effect

The possibility exists that the fund that owes the funds might be unable to repay the balance.

Recommendation to prevent future occurrences

The interfund balance should be paid off as soon as possible.

View or Responsible Official

We will comply with the auditor’s recommendation. I do note that we were short of personnel for the entire audit period. I believe that I have staff presently that can do most of the assigned duties. I admit that not all of the deficiencies noted were due to being understaffed, but lack of training (being new to HUD) and understanding. But we will also correct those errors to the best of our ability.