Audit 1935

FY End

2023-03-31

Total Expended

$1.21M

Findings

2

Programs

4

Organization: Housing Authority of City of Covington (LA)

Year: 2023 Accepted: 2023-10-31

Auditor: The Vercher Group

Organization Exclusion Status:

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ID	Ref	Severity	Repeat	Requirement
1025	2023-001	-	-	B
577467	2023-001	-	-	B

ALN	Program	Spent	Major	Findings
14.871	Section 8 Housing Choice Vouchers	$903,922	Yes	1
14.850	Public and Indian Housing	$163,238	-	0
14.872	Public Housing Capital Fund	$100,383	-	0
97.036	Disaster Grants - Public Assistance (presidentially Declared Disasters)	$41,835	-	0

Contacts

Name	Title	Type
CH39F63LS4H5	Tammie Groover	Auditee
9858980345	John Vercher	Auditor
No contacts on file

Notes to SEFA

Title: Note A-Single Audit Requirement Accounting Policies: In July 1996, the Single Audit Act Amendments of 1996 (1996 Act) were enacted and superseded the Single Audit Act of 1984. In June 1997 OMB issued a revised Circular A-133, Audits of States, Local Governments, and Non Profit Organizations, to implement the changes from the 1996 Act and to rescind Circular A-128. On 06/27/2003 OMB Circular A-133 was revised for fiscal years ending 12/31/2003 and forward. For 2015 and forward OMB Circular A-133 has been superseded in its entirety by OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirement for Federal Awards (Uniform Guidance) which changes the single audit threshold to $750,000. De Minimis Rate Used: N Rate Explanation: Covington Housing Authority has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. Note A – Single Audit Requirements In July 1996, the Single Audit Act Amendments of 1996 (1996 Act) were enacted and superseded the Single Audit Act of 1984. In June 1997 OMB issued a revised Circular A-133, Audits of States, Local Governments, and Non Profit Organizations, to implement the changes from the 1996 Act and to rescind Circular A-128. On 06/27/2003 OMB Circular A-133 was revised for fiscal years ending 12/31/2003 and forward. For 2015 and forward OMB Circular A-133 has been superseded in its entirety by OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirement for Federal Awards (Uniform Guidance) which changes the single audit threshold to $750,000. The funds used to account for these funds use the accrual basis of accounting. 1. General The accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal awards programs of the Housing Authority. The Housing Authority reporting entity is defined in Note 1 to the Housing Authority’s basic financial statements. Federal awards received directly from federal agencies, as well as federal awards passed through other governmental agencies, are included on the schedule. 2. Basis of Accounting The accompanying Schedule of expenditures of Federal Awards is presented using the accrual basis of accounting, which is described in Note 1 to the Housing Authority’s basic financial statements. 3. Relationship To Basic Financial Statements Federal award revenues are reported in the Housing Authority’s basic financial statements as follows: General: Operating Subsidy – Public & Indian Housing Disaster Grants-Public Assistance $ 163,238 41,835 Capital Fund Grant Section 8 Housing Choice Vouchers 100,383 903,922 Total $ 1,209,378 Amounts reported in the accompanying schedule agree with the amounts reported in the related federal financial reports except for changes made to reflect amounts in accordance with U.S. generally accepted accounting principles. 4. Federal Awards In accordance with HUD Notice PIH 98-14, “federal awards” do not include the Housing Authority’s operating income from rents or investments (or other non-federal sources). In addition, the entire amount of operating subsidy received during the fiscal year is considered to be “expended” during the fiscal year. HOUSING AUTHORITY OF THE CITY OF COVINGTON COVINGTON, LOUISIANA NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS-(CONTINUED) For the Year Ended March 31, 2023 5.) Indirect Cost Rate Covington Housing Authority has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. Presented for purposes of additional analysis only.

Finding Details

Finding 2023-001

Condition: The Section 8 program ended the year with a negative unrestricted equity of $6,810. A negative unrestricted equity balance is an indication that Housing Assistance Payments (HAP) funds are being spent on administration costs. Criteria: The ACC establishes the amounts HUD will provide a PHA for HAP and administrative fees. With the exception of Moving to Work Housing Authorities, HAP may not be used to cover administrative expenses nor may HAP (including RNP) be loaned, advanced, or transferred to other component units or other programs such as Public and Indian Housing (Assistance Listing 14.850) (24 CFFR sections 982.151 and 982.152). Cause of Condition: The Section 8 program had long-term compensated absences in the amount of $33,772 which can reflect a “false” negative equity balance in the program. Potential effect of Condition: Possible compliance violation. Recommendation: The negative unrestricted equity balance should be brought to a positive equity balance as soon as possible. Client Response: If the long-term compensated absences balance of $33,772 were removed, there would not be a negative unrestricted equity balance of $6,810. There is VMS guidance on the impact of a “false” negative balance as a result of employer accruals specifically to accrued pension and OPEB liabilities. The long-term compensated absences balance of $33,772 is causing the same “false” negative equity balance as does accrued pension and OPEB liabilities. It is suggested the PHA insert a comment in the ‘comments’ section to reflect the portion of the UNP balance that is attributable to the unfunded pension and OPEB liability and provide the actual ‘cash equivalent’ UNP balance (the UNP “should be” balance if the pension and OPEB liability were removed). The Executive Director will have the negative unrestricted equity balance corrected in the near future.

Finding 2023-001

Condition: The Section 8 program ended the year with a negative unrestricted equity of $6,810. A negative unrestricted equity balance is an indication that Housing Assistance Payments (HAP) funds are being spent on administration costs. Criteria: The ACC establishes the amounts HUD will provide a PHA for HAP and administrative fees. With the exception of Moving to Work Housing Authorities, HAP may not be used to cover administrative expenses nor may HAP (including RNP) be loaned, advanced, or transferred to other component units or other programs such as Public and Indian Housing (Assistance Listing 14.850) (24 CFFR sections 982.151 and 982.152). Cause of Condition: The Section 8 program had long-term compensated absences in the amount of $33,772 which can reflect a “false” negative equity balance in the program. Potential effect of Condition: Possible compliance violation. Recommendation: The negative unrestricted equity balance should be brought to a positive equity balance as soon as possible. Client Response: If the long-term compensated absences balance of $33,772 were removed, there would not be a negative unrestricted equity balance of $6,810. There is VMS guidance on the impact of a “false” negative balance as a result of employer accruals specifically to accrued pension and OPEB liabilities. The long-term compensated absences balance of $33,772 is causing the same “false” negative equity balance as does accrued pension and OPEB liabilities. It is suggested the PHA insert a comment in the ‘comments’ section to reflect the portion of the UNP balance that is attributable to the unfunded pension and OPEB liability and provide the actual ‘cash equivalent’ UNP balance (the UNP “should be” balance if the pension and OPEB liability were removed). The Executive Director will have the negative unrestricted equity balance corrected in the near future.