Finding 2023-004: Internal Control Structure
Housing Choice Voucher, 14.871
Material Weakness – Eligibility, Reporting and Special Tests and Provisions
Criteria: The Authority is responsible for establishing an effective internal control process to ensure the Authority complies with the requirements governing the Housing Choice Voucher program.
Condition: The Authority has one employee that is responsible for the Housing Choice Voucher program tenant files which include income, deduction and HAP calculations, reporting and special tests and provisions such as rent reasonableness. The Authority has not establish controls such as documented supervisory reviews which could be used to detect and prevent errors or noncompliance.
Cause: The Authority has not evaluated the risks related to errors or noncompliance and established internal control procedures the would prevent and detect errors and noncompliance.
Effect or Potential Effect: The control deficiencies are deficiencies that result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected
Recommendation: The Authority should review its procedures and establish control procedures to ensure compliance with Housing Choice Voucher rules and regulations. The control procedures should be documented.
View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding but can not reasonably adopt internal control procedures to correct the material weakness.
Finding 2023-005: Deposit Collateralization
Housing Choice Voucher Program – 14.871
Material Weakness/Noncompliance – Special Tests and Provisions
Repeat Finding 2022-003
Criteria: The Authority is required to enter into a current depository agreement with its financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third-party rights to HUD.
Condition: The Authority did have a HUD depository agreement with its bank but the form was the 1991 version and not the current version required by HUD.
Cause: The Authority was not monitoring to ensure it had the current depository agreement
Effect or Potential Effect: The Authority was in noncompliance with HUD’s requirement to have proper depository agreements.
Recommendation: The Authority should obtain a current depository agreement with its bank and monitor to ensure it stays up-to-date with the form for any new versions.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.
Finding 2023-006: Allowable Costs
Housing Choice Voucher Program – 14.871, Public Housing – 14.850
Material Weakness/Noncompliance – Allowable Costs
Criteria: In the Public Housing program, transfers out of the operating fund can only occur in very limited circumstances. This would preclude the Authority from using operating funds to provide temporary loans to programs with the Authority. Interfund transactions indicate the existence of temporary loans.
In the Housing Choice Voucher program, the transfers of HAP, and associated administrative fees, even temporarily, to support another program or use are not allowed and could be considered a breach of the annual contributions contract.
Condition: The Authority’s Public Housing program pays all of the operating expenses of the Authority and the expenses are allocated between both the Public Housing and Voucher programs. At June 30, 2022, the Voucher program had a receivable of $49,694.77 from Public Housing as it appeared the Voucher program had over-reimbursed Public Housing. During the year ending June 30, 2023, the expenses were correctly allocated to the Voucher program but no reimbursements occurred which resulted in the Voucher program now owing Public Housing $62,486.09 at June 30, 2023, a change of $112,180.86.
We further noted the Authority did not have procedures to adopt an operating budget for the Voucher program as a control to device to ensure operating costs were reasonable and the program remains financially viable.
Cause: The Authority did not have a system in place to reimburse shared expenses timely and the Authority was not monitoring the balances.
Effect or Potential Effect: The Authority was in noncompliance with the regulations regarding temporary loans to other Authority programs.
Recommendation: The large interfund balance was brought to the Authority’s attention by its fee accountant and $59,627.35 was paid from Voucher to Public Housing on July 7, 2023. The Authority should reimburse the remainder of the balance and establish procedures to reimburse shared expenses timely.
The Authority should also establish procedures to adopt an operating budget annually for the Voucher program. The operating budget should included with its monthly financial reports for a comparison of actual to budgeted figures.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding but can not reasonably adopt internal control procedures to correct the material weakness.
Finding 2023-006: Allowable Costs
Housing Choice Voucher Program – 14.871, Public Housing – 14.850
Material Weakness/Noncompliance – Allowable Costs
Criteria: In the Public Housing program, transfers out of the operating fund can only occur in very limited circumstances. This would preclude the Authority from using operating funds to provide temporary loans to programs with the Authority. Interfund transactions indicate the existence of temporary loans.
In the Housing Choice Voucher program, the transfers of HAP, and associated administrative fees, even temporarily, to support another program or use are not allowed and could be considered a breach of the annual contributions contract.
Condition: The Authority’s Public Housing program pays all of the operating expenses of the Authority and the expenses are allocated between both the Public Housing and Voucher programs. At June 30, 2022, the Voucher program had a receivable of $49,694.77 from Public Housing as it appeared the Voucher program had over-reimbursed Public Housing. During the year ending June 30, 2023, the expenses were correctly allocated to the Voucher program but no reimbursements occurred which resulted in the Voucher program now owing Public Housing $62,486.09 at June 30, 2023, a change of $112,180.86.
We further noted the Authority did not have procedures to adopt an operating budget for the Voucher program as a control to device to ensure operating costs were reasonable and the program remains financially viable.
Cause: The Authority did not have a system in place to reimburse shared expenses timely and the Authority was not monitoring the balances.
Effect or Potential Effect: The Authority was in noncompliance with the regulations regarding temporary loans to other Authority programs.
Recommendation: The large interfund balance was brought to the Authority’s attention by its fee accountant and $59,627.35 was paid from Voucher to Public Housing on July 7, 2023. The Authority should reimburse the remainder of the balance and establish procedures to reimburse shared expenses timely.
The Authority should also establish procedures to adopt an operating budget annually for the Voucher program. The operating budget should included with its monthly financial reports for a comparison of actual to budgeted figures.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding but can not reasonably adopt internal control procedures to correct the material weakness.
Finding 2023-004: Internal Control Structure
Housing Choice Voucher, 14.871
Material Weakness – Eligibility, Reporting and Special Tests and Provisions
Criteria: The Authority is responsible for establishing an effective internal control process to ensure the Authority complies with the requirements governing the Housing Choice Voucher program.
Condition: The Authority has one employee that is responsible for the Housing Choice Voucher program tenant files which include income, deduction and HAP calculations, reporting and special tests and provisions such as rent reasonableness. The Authority has not establish controls such as documented supervisory reviews which could be used to detect and prevent errors or noncompliance.
Cause: The Authority has not evaluated the risks related to errors or noncompliance and established internal control procedures the would prevent and detect errors and noncompliance.
Effect or Potential Effect: The control deficiencies are deficiencies that result in more than a reasonable possibility that material noncompliance with program requirements could occur and not be prevented or detected
Recommendation: The Authority should review its procedures and establish control procedures to ensure compliance with Housing Choice Voucher rules and regulations. The control procedures should be documented.
View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding but can not reasonably adopt internal control procedures to correct the material weakness.
Finding 2023-005: Deposit Collateralization
Housing Choice Voucher Program – 14.871
Material Weakness/Noncompliance – Special Tests and Provisions
Repeat Finding 2022-003
Criteria: The Authority is required to enter into a current depository agreement with its financial institutions in the form required by HUD. The agreements serve as safeguards for federal funds and provide third-party rights to HUD.
Condition: The Authority did have a HUD depository agreement with its bank but the form was the 1991 version and not the current version required by HUD.
Cause: The Authority was not monitoring to ensure it had the current depository agreement
Effect or Potential Effect: The Authority was in noncompliance with HUD’s requirement to have proper depository agreements.
Recommendation: The Authority should obtain a current depository agreement with its bank and monitor to ensure it stays up-to-date with the form for any new versions.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.
Finding 2023-006: Allowable Costs
Housing Choice Voucher Program – 14.871, Public Housing – 14.850
Material Weakness/Noncompliance – Allowable Costs
Criteria: In the Public Housing program, transfers out of the operating fund can only occur in very limited circumstances. This would preclude the Authority from using operating funds to provide temporary loans to programs with the Authority. Interfund transactions indicate the existence of temporary loans.
In the Housing Choice Voucher program, the transfers of HAP, and associated administrative fees, even temporarily, to support another program or use are not allowed and could be considered a breach of the annual contributions contract.
Condition: The Authority’s Public Housing program pays all of the operating expenses of the Authority and the expenses are allocated between both the Public Housing and Voucher programs. At June 30, 2022, the Voucher program had a receivable of $49,694.77 from Public Housing as it appeared the Voucher program had over-reimbursed Public Housing. During the year ending June 30, 2023, the expenses were correctly allocated to the Voucher program but no reimbursements occurred which resulted in the Voucher program now owing Public Housing $62,486.09 at June 30, 2023, a change of $112,180.86.
We further noted the Authority did not have procedures to adopt an operating budget for the Voucher program as a control to device to ensure operating costs were reasonable and the program remains financially viable.
Cause: The Authority did not have a system in place to reimburse shared expenses timely and the Authority was not monitoring the balances.
Effect or Potential Effect: The Authority was in noncompliance with the regulations regarding temporary loans to other Authority programs.
Recommendation: The large interfund balance was brought to the Authority’s attention by its fee accountant and $59,627.35 was paid from Voucher to Public Housing on July 7, 2023. The Authority should reimburse the remainder of the balance and establish procedures to reimburse shared expenses timely.
The Authority should also establish procedures to adopt an operating budget annually for the Voucher program. The operating budget should included with its monthly financial reports for a comparison of actual to budgeted figures.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding but can not reasonably adopt internal control procedures to correct the material weakness.
Finding 2023-006: Allowable Costs
Housing Choice Voucher Program – 14.871, Public Housing – 14.850
Material Weakness/Noncompliance – Allowable Costs
Criteria: In the Public Housing program, transfers out of the operating fund can only occur in very limited circumstances. This would preclude the Authority from using operating funds to provide temporary loans to programs with the Authority. Interfund transactions indicate the existence of temporary loans.
In the Housing Choice Voucher program, the transfers of HAP, and associated administrative fees, even temporarily, to support another program or use are not allowed and could be considered a breach of the annual contributions contract.
Condition: The Authority’s Public Housing program pays all of the operating expenses of the Authority and the expenses are allocated between both the Public Housing and Voucher programs. At June 30, 2022, the Voucher program had a receivable of $49,694.77 from Public Housing as it appeared the Voucher program had over-reimbursed Public Housing. During the year ending June 30, 2023, the expenses were correctly allocated to the Voucher program but no reimbursements occurred which resulted in the Voucher program now owing Public Housing $62,486.09 at June 30, 2023, a change of $112,180.86.
We further noted the Authority did not have procedures to adopt an operating budget for the Voucher program as a control to device to ensure operating costs were reasonable and the program remains financially viable.
Cause: The Authority did not have a system in place to reimburse shared expenses timely and the Authority was not monitoring the balances.
Effect or Potential Effect: The Authority was in noncompliance with the regulations regarding temporary loans to other Authority programs.
Recommendation: The large interfund balance was brought to the Authority’s attention by its fee accountant and $59,627.35 was paid from Voucher to Public Housing on July 7, 2023. The Authority should reimburse the remainder of the balance and establish procedures to reimburse shared expenses timely.
The Authority should also establish procedures to adopt an operating budget annually for the Voucher program. The operating budget should included with its monthly financial reports for a comparison of actual to budgeted figures.
View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding but can not reasonably adopt internal control procedures to correct the material weakness.