County Housing Authority audit finds problems

Matt Baide | Jul 06, 20230

The state Auditor’s Office released an accountability audit of the Housing Authority of Mason County, finding problems in the organization and offering recommendations on how to fix them.

The accountability audit was released May 25, and examines the Housing Authority from Oct. 1, 2016, to Sept. 30, 2021. In the areas examined, the audit states the Housing Authority operations did not comply in all material respects with state laws, regulations or its own policies. The Housing Authority also did not provide adequate controls over safeguarding public resources in the areas examined.

“Management is responsible for ensuring compliance and adequate safeguarding of public resources from fraud, loss or abuse,” the audit report states. “This includes the design, implementation and maintenance of internal controls relevant to these objectives. The board, as governing body, has ultimate responsibility for ensuring adequate controls are in place, even if it delegates the primary responsibility of designing, implementing and maintaining internal controls to others.”

The Mason County Housing Authority Board of Commissioners is a five-member board, but has just four members. George Blush is the chair of the board, and Dale Elmlund, April Pruitt-Pooler and Allan Emmons Jr. are board members. Blush, Pruitt-Pooler and Emmons Jr. all have terms expiring Nov. 17, 2025. Elmlund’s term expires Oct. 1, 2026.

The report states the Auditor’s Office has audited the Housing Authority every three years due to its revenues being limited, but beginning in 2020, the Housing Authority stopped filing its annual financial data to the Auditor’s Office in a timely manner.

The audit found the Housing Authority did not comply with the Open Public Meetings Act, specifically in 2017 and 2020, for not having any meetings due to a lack of a board quorum. During those years, the board did not take any official actions, did not monitor the authority’s contracted property manager and did not approve transactions.

The report also states for meetings held during that time, the minutes did not document regular reviews and approvals of expenditures or financial information. The authority could not provide meeting minutes for two meetings during those years.

The Auditor’s Office recommended taking steps to ensure compliance with the Open Public Meetings Act, including ensuring commissioners and staff receive training on the Open Public Meetings Act, Public Records Act and other applicable state laws, comply with OPMA requirements, establish internal controls and monitoring procedures and retain records to support its operations and financial activity.

The housing authority responded to the findings, stating it has hired staff to manage operations of the Authority.

“The Mason County Housing Authority has hired staff to manage the operations of the Housing Authority in addition to terminating a management contract that was not effectively managing the affairs of the housing authority and hired a new management company located in Washington state who is aware of all state laws and requirements of housing authorities in the State of Washington,” the Housing Authority response in the report states. “Additionally, the Board of the Housing Authority has been made aware of their responsibilities. The staff will be responsible for establishing and managing the responsibilities for internal controls and monitoring procedures, records retention as well as offering training on OPMA, PRA and other applicable state laws to the board.”

The state audit also states the authority’s financial condition puts it at risk to not be able to meet its financial obligations, according to the report. The authority owns three properties composed of 109 units serving low-income citizens in Mason County.

“We reviewed unaudited financial data submitted to our office and other information gathered during the audit and continue to note concerns with the authority’s financial condition,” the report states. “Specifically, we found unrestricted cash continued to decline, decreasing about $239,110 from fiscal year 2017 to $52,870 in 2021. This unrestricted cash represents about 27 days of average daily operating expenditures. Additionally, about 30% of the authority’s annual revenues are dedicated to required debt payments.”

The housing authority responded in the state report by stating it has acquired financial assistance and grants from Mason County and the state Department of Commerce to fund deferred maintenance on its facilities in the past year.

“The housing authority will continue to solicit financial assistance from local, state and federal agencies for this purpose,” the report states. “It has also canceled its management contract and is developing a relationship with a new management company that will manage cash and cash flow much more effectively. New housing authority staff will, annually, prepare and review a five-year financial plan in conjunction with the CPA firm as well as the new management company. The housing authority is also planning on selling off some of its properties allowing for the consolidation of cash and reducing cash outflows.”

The accountability audit also states the housing authority lacked adequate internal controls over financial reporting to ensure compliance with timely annual report submissions.

The report includes a summary schedule of prior audit findings and determines whether or not corrections were made. From the audit from Oct. 2013 to Sept. 2016, an audit found the housing authority did not file annual financial reports, which was not corrected, but the authority hired a management company and certified public accountant from the state to try to correct the problem.

The housing authority also had the same problem from the 2013 to 2016 audit of being at risk of not meeting its financial obligations. The management contract was stated as the reason why and the new company was the corrective action taken to mitigate the problem.

To view the full report, go to http://www.tinyurl.com/yckv7d8v.