Audit 341129

2024-001 ALN 14.871 – Housing Voucher Cluster – Activities Allowed or Unallowed Condition and Criteria: The Housing Authority of Lake City operates several distinct programs. Allocated expenses are paid from the multi-family housing fund and reimbursed using inter-program accounts. Reimbursement between programs was not made timely by prior management which caused an increase in inter-program receivables and payables over time. Cash management is the process of managing the Housing Authority (PHA) to optimize its use of funds. This process involves the timing of receipts and disbursements to assure the availability of funds to meet expenditures and to maximize the yield from the investment of temporary surplus funds. The Authority’s prior management incurred unallowable cost for the inter-program balances between the Section 8 HAP (“Multi-family”) program, N/C S/R Section 8 program and Housing Choice Voucher program due to poor cash management controls. Amount of Questioned Costs: $127,254, resulting in unallowable costs created over years due to prior management’s lack of internal controls. Context: The Authority’s prior management failed to ensure inter-program advances were reimbursed properly and timely. Costs assigned to the Multi-family program, N/C S/R Section 8 program, or Housing Choice Voucher program could be unallowable and/or unreasonable. Current management has made significant strides to improve the financial status and appropriately addressed the financial status of the Housing Authority. Thus, the amount of questioned costs has significantly decreased from prior years. Cause: Inter-program cash advances from Multi-family Housing to the N/C S/R Section 8 program and the Housing Choice Voucher program were not reimbursed properly or timely and continued to accumulate over the years due to prior management’s lack of internal controls. Effect: The Multi-family (post conversion to RAD) program is due $19,593 from the N/R S/R Section 8 program and $107,661 from the Housing Choice Voucher program resulting in unallowable costs created over years due to prior management’s lack of internal controls. Auditor’s Recommendation: The Housing Authority must continue reconciling accounts for the N/C S/R Section 8 program or Housing Choice Voucher program to pay down its liability to the Multi-family program that was accumulated from the prior management. Timely repayment of cash advances from one program to the other when costs are allocated between programs. Strict budgeting procedures must be set in place to allow the programs to replenish reserves. Grantee Response: In 2021, the Authority was instructed by Keith Landrum of the Columbia, South Carolina HUD Field Office to stop making payments until the matter could be further investigated to see what amounts, if any, are still owed. Management will continue to monitor budgets to ensure that funds are adequate. Management has and will continue to make budget revisions to reduce unessential operating costs. The Authority has designed and implemented a Board approved formal repayment agreement.

2024-001 ALN 14.871 – Housing Voucher Cluster – Activities Allowed or Unallowed Condition and Criteria: The Housing Authority of Lake City operates several distinct programs. Allocated expenses are paid from the multi-family housing fund and reimbursed using inter-program accounts. Reimbursement between programs was not made timely by prior management which caused an increase in inter-program receivables and payables over time. Cash management is the process of managing the Housing Authority (PHA) to optimize its use of funds. This process involves the timing of receipts and disbursements to assure the availability of funds to meet expenditures and to maximize the yield from the investment of temporary surplus funds. The Authority’s prior management incurred unallowable cost for the inter-program balances between the Section 8 HAP (“Multi-family”) program, N/C S/R Section 8 program and Housing Choice Voucher program due to poor cash management controls. Amount of Questioned Costs: $127,254, resulting in unallowable costs created over years due to prior management’s lack of internal controls. Context: The Authority’s prior management failed to ensure inter-program advances were reimbursed properly and timely. Costs assigned to the Multi-family program, N/C S/R Section 8 program, or Housing Choice Voucher program could be unallowable and/or unreasonable. Current management has made significant strides to improve the financial status and appropriately addressed the financial status of the Housing Authority. Thus, the amount of questioned costs has significantly decreased from prior years. Cause: Inter-program cash advances from Multi-family Housing to the N/C S/R Section 8 program and the Housing Choice Voucher program were not reimbursed properly or timely and continued to accumulate over the years due to prior management’s lack of internal controls. Effect: The Multi-family (post conversion to RAD) program is due $19,593 from the N/R S/R Section 8 program and $107,661 from the Housing Choice Voucher program resulting in unallowable costs created over years due to prior management’s lack of internal controls. Auditor’s Recommendation: The Housing Authority must continue reconciling accounts for the N/C S/R Section 8 program or Housing Choice Voucher program to pay down its liability to the Multi-family program that was accumulated from the prior management. Timely repayment of cash advances from one program to the other when costs are allocated between programs. Strict budgeting procedures must be set in place to allow the programs to replenish reserves. Grantee Response: In 2021, the Authority was instructed by Keith Landrum of the Columbia, South Carolina HUD Field Office to stop making payments until the matter could be further investigated to see what amounts, if any, are still owed. Management will continue to monitor budgets to ensure that funds are adequate. Management has and will continue to make budget revisions to reduce unessential operating costs. The Authority has designed and implemented a Board approved formal repayment agreement.