Audit 351001

2024-001 ALN 14.872 – Public Housing Capital Fund Program – Cash Management Condition and Criteria: In accordance with Chapter 7 of the CFP Guidebook, a Public Housing Agency (PHA) is to first disburse CFP funds from LOCCS to the PHA’s bank account and then pay the applicable bill(s) within 3 business days after the deposit of the funds into the PHA’s bank account. The Authority has internal control deficiencies over CFP cash management as they were drawing down CFP grant money well after the Authority had incurred and paid for the corresponding expenses. Amount of Questioned Costs: N/A Context: The Authority incurred $260,425 of CFP expenses during the year under audit, all of which have been recorded as Accounts Receivable – Due From HUD as $230,261 have not been drawn down from LOCCS. Additionally, the Authority incurred CFP expenses exceeding $572,000 in previous years that has also not been drawn down and included in Accounts Receivable – Due From HUD. Cause: The Authority did not properly design internal controls over the CFP grant disbursement and expenditures process in order to ensure that CFP drawdowns were being requested prior to the costs incurred being paid. Effect: The Authority was not abiding by the CFP Grant Agreement or the HUD CFP Guidebook by drawing down CFP grant funds well after the Authority had incurred and paid for the corresponding expenses. By using the Capital Fund Program on a reimbursement basis, the Authority built up a large balance of Accounts Receivable – Due From HUD of $802,398. Auditor’s Recommendation: Internal control procedures should be updated and implemented to be in line with the Capital Fund Guidebook by changing the handling of CFP grant disbursements from being done on a reimbursement basis to being done in advance of making payments to vendors and contractors. Grantee Response: Management acknowledges the finding and will follow the auditor’s recommendation.

2024-001 ALN 14.872 – Public Housing Capital Fund Program – Cash Management Condition and Criteria: In accordance with Chapter 7 of the CFP Guidebook, a Public Housing Agency (PHA) is to first disburse CFP funds from LOCCS to the PHA’s bank account and then pay the applicable bill(s) within 3 business days after the deposit of the funds into the PHA’s bank account. The Authority has internal control deficiencies over CFP cash management as they were drawing down CFP grant money well after the Authority had incurred and paid for the corresponding expenses. Amount of Questioned Costs: N/A Context: The Authority incurred $260,425 of CFP expenses during the year under audit, all of which have been recorded as Accounts Receivable – Due From HUD as $230,261 have not been drawn down from LOCCS. Additionally, the Authority incurred CFP expenses exceeding $572,000 in previous years that has also not been drawn down and included in Accounts Receivable – Due From HUD. Cause: The Authority did not properly design internal controls over the CFP grant disbursement and expenditures process in order to ensure that CFP drawdowns were being requested prior to the costs incurred being paid. Effect: The Authority was not abiding by the CFP Grant Agreement or the HUD CFP Guidebook by drawing down CFP grant funds well after the Authority had incurred and paid for the corresponding expenses. By using the Capital Fund Program on a reimbursement basis, the Authority built up a large balance of Accounts Receivable – Due From HUD of $802,398. Auditor’s Recommendation: Internal control procedures should be updated and implemented to be in line with the Capital Fund Guidebook by changing the handling of CFP grant disbursements from being done on a reimbursement basis to being done in advance of making payments to vendors and contractors. Grantee Response: Management acknowledges the finding and will follow the auditor’s recommendation.