2024-001 ALN 14.850 – Public Housing Operating Fund – Activities Allowed, Unallowed
Condition and Criteria:
24 CFR 990.280(b) permits the use of Public Housing Operating Fund (PHOF) for specific project related operating expenses. It does not permit such amounts to be loaned to related parties.
In prior years, the Authority had loaned PHOF monies to related parties. As of September 30, 2024, $98,663 of PHOF loans remain outstanding to discretely presented component units of the Authority. $126,892 remains outstanding to other programs of the Authority, $100,642 of which was loaned to the Business Activities program which houses the Authority's non-federal funds.
Amount of Questioned Costs:
$199,305
Context:
The Authority’s Public Housing Operating Fund has miscellaneous receivables from Edgefield Senior Housing, LLC, Valley Homes, LLC, and other related parties in the amounts of $9,152, $22,459, and $67,052, respectively. The Public Housing Program is also due $100,642 from the Business Activities program.
Cause:
Management of the Authority in prior years (who were different individuals than the current management of the Authority) either did not understand or did not follow federal guidelines.
Effect:
Public Housing monies were used for unallowed purposes.
Auditor’s Recommendation:
The management of the Authority should continue to pursue collection of these amounts.
Grantee Response:
The Authority has developed procedures to ensure that restricted funds are repaid to the Low Rent Program and to ensure that further restricted funds are not advanced. Upon notification from the Department of Housing and Urban Development to cease and desist of the Authority’s cost sharing agreement, the Authority immediately discontinued the advancement of funds to other programs operated by the Authority. Current management is actively pursuing collection efforts and understands these federal guidelines.
2024-002 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 CFP expenses during the year under audit of $32,177 that have been recorded as Accounts Receivable- Due From HUD as none of these funds have been drawn down from LOCCS. Additionally, the Authority accumulated a significant amount of expenses over the course of several weeks and months, ultimately submitting large lump-sum drawdowns to reimburse the total amount incurred.
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.
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:
The Authority has developed and implemented the necessary standard operating procedures to ensure Capital Fund Program grant disbursements are being drawn down prior to the issuance of payments to vendors and/or contractors.
2024-001 ALN 14.850 – Public Housing Operating Fund – Activities Allowed, Unallowed
Condition and Criteria:
24 CFR 990.280(b) permits the use of Public Housing Operating Fund (PHOF) for specific project related operating expenses. It does not permit such amounts to be loaned to related parties.
In prior years, the Authority had loaned PHOF monies to related parties. As of September 30, 2024, $98,663 of PHOF loans remain outstanding to discretely presented component units of the Authority. $126,892 remains outstanding to other programs of the Authority, $100,642 of which was loaned to the Business Activities program which houses the Authority's non-federal funds.
Amount of Questioned Costs:
$199,305
Context:
The Authority’s Public Housing Operating Fund has miscellaneous receivables from Edgefield Senior Housing, LLC, Valley Homes, LLC, and other related parties in the amounts of $9,152, $22,459, and $67,052, respectively. The Public Housing Program is also due $100,642 from the Business Activities program.
Cause:
Management of the Authority in prior years (who were different individuals than the current management of the Authority) either did not understand or did not follow federal guidelines.
Effect:
Public Housing monies were used for unallowed purposes.
Auditor’s Recommendation:
The management of the Authority should continue to pursue collection of these amounts.
Grantee Response:
The Authority has developed procedures to ensure that restricted funds are repaid to the Low Rent Program and to ensure that further restricted funds are not advanced. Upon notification from the Department of Housing and Urban Development to cease and desist of the Authority’s cost sharing agreement, the Authority immediately discontinued the advancement of funds to other programs operated by the Authority. Current management is actively pursuing collection efforts and understands these federal guidelines.
2024-002 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 CFP expenses during the year under audit of $32,177 that have been recorded as Accounts Receivable- Due From HUD as none of these funds have been drawn down from LOCCS. Additionally, the Authority accumulated a significant amount of expenses over the course of several weeks and months, ultimately submitting large lump-sum drawdowns to reimburse the total amount incurred.
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.
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:
The Authority has developed and implemented the necessary standard operating procedures to ensure Capital Fund Program grant disbursements are being drawn down prior to the issuance of payments to vendors and/or contractors.