Audit 330764

2023-001 ALN 14.871 - Housing Voucher Cluster – Activities Allowed and Unallowed Condition and Criteria: Resources from one program cannot be used to support the costs of another program, even on a short-term temporary basis. Housing Choice Vouchers program resources are constrained by law and regulation to support Housing Choice Vouchers program activities. Per PHA – Finance Accounting Brief #14, although HUD allows the use of a common checking or working capital account, if cash balances are unable to be reconciled at year end as if there were no common checking or working capital account this signifies to HUD that one program has in fact used resources to cover the costs of another program, which could represent ineligible expenditures. The Authority has an unsubstantiated Inter-program Receivable / Payable between the Housing Choice Vouchers program and other federal and non-federal programs. The Housing Choice Vouchers program did not have sufficient unrestricted resources to cover expenditures made on behalf of another program. Housing Choice Vouchers program funds are not fungible between different federal programs regardless of the nature of the transfer or receivable. Amount of Questioned Costs: $242,875 Context: The Authority accrued inter-program receivables/payables during the year under audit that resulted in the Housing Choice Vouchers program loaning federal funds to other federal and non-federal programs. The Housing Choice Vouchers program also did not have the necessary unrestricted resources available, and the use of federal funds are not fungible between programs Account balances within the financial reports should have adequate backup documentation supporting the makeup of the activities and the amounts that makeup the ending balances. Cause: Inter-program cash advances between programs were not reimbursed properly or timely and continued to accumulate over the years due to prior management’s lack on internal controls. Effect: These account balances do not affect the overall financial statements as these accounts offset each other and do not end up being included in the overall financial statements. However, these transactions could include unallowable or improper activities such as the unallowable co-mingling of funds between the Housing Choice Vouchers and other federal and non-federal programs as there is no way of verifying whether or not these inter-program activities are allowable or whether they are indeed true receivables/liabilities. These inter-program balances also affect the Housing Choice Vouchers program as it has a significant receivable balance that may or may not be received from other federal and non-federal programs. Auditor’s Recommendation: In the future the Authority should strengthen their internal controls related to monitoring inter-program activities and should look for ways to keep these transactions at a minimum. For those inter-program activities that do occur in the future, the Authority should perform the necessary steps to ensure that these transactions are sufficiently documented and supported by adequate backup and are paid back to the proper program in a consistent and timely manner. It is our recommendation that the Authority reconcile its common checking account on a monthly basis to ensure that the cash balances reported in each program reflect the actual share of cash of that program. The Authority should also review over HUD guidelines on the use of common checking accounts and inter-program balances. Grantee Response: The Executive Director acknowledges the finding and is following the auditor’s recommendation.

2023-001 ALN 14.871 - Housing Voucher Cluster – Activities Allowed and Unallowed Condition and Criteria: Resources from one program cannot be used to support the costs of another program, even on a short-term temporary basis. Housing Choice Vouchers program resources are constrained by law and regulation to support Housing Choice Vouchers program activities. Per PHA – Finance Accounting Brief #14, although HUD allows the use of a common checking or working capital account, if cash balances are unable to be reconciled at year end as if there were no common checking or working capital account this signifies to HUD that one program has in fact used resources to cover the costs of another program, which could represent ineligible expenditures. The Authority has an unsubstantiated Inter-program Receivable / Payable between the Housing Choice Vouchers program and other federal and non-federal programs. The Housing Choice Vouchers program did not have sufficient unrestricted resources to cover expenditures made on behalf of another program. Housing Choice Vouchers program funds are not fungible between different federal programs regardless of the nature of the transfer or receivable. Amount of Questioned Costs: $242,875 Context: The Authority accrued inter-program receivables/payables during the year under audit that resulted in the Housing Choice Vouchers program loaning federal funds to other federal and non-federal programs. The Housing Choice Vouchers program also did not have the necessary unrestricted resources available, and the use of federal funds are not fungible between programs Account balances within the financial reports should have adequate backup documentation supporting the makeup of the activities and the amounts that makeup the ending balances. Cause: Inter-program cash advances between programs were not reimbursed properly or timely and continued to accumulate over the years due to prior management’s lack on internal controls. Effect: These account balances do not affect the overall financial statements as these accounts offset each other and do not end up being included in the overall financial statements. However, these transactions could include unallowable or improper activities such as the unallowable co-mingling of funds between the Housing Choice Vouchers and other federal and non-federal programs as there is no way of verifying whether or not these inter-program activities are allowable or whether they are indeed true receivables/liabilities. These inter-program balances also affect the Housing Choice Vouchers program as it has a significant receivable balance that may or may not be received from other federal and non-federal programs. Auditor’s Recommendation: In the future the Authority should strengthen their internal controls related to monitoring inter-program activities and should look for ways to keep these transactions at a minimum. For those inter-program activities that do occur in the future, the Authority should perform the necessary steps to ensure that these transactions are sufficiently documented and supported by adequate backup and are paid back to the proper program in a consistent and timely manner. It is our recommendation that the Authority reconcile its common checking account on a monthly basis to ensure that the cash balances reported in each program reflect the actual share of cash of that program. The Authority should also review over HUD guidelines on the use of common checking accounts and inter-program balances. Grantee Response: The Executive Director acknowledges the finding and is following the auditor’s recommendation.