Audit 364768

Finding 2025-001 Special Tests and Provisions over Formula Income Public Housing Program, Assistance Listing #14.850 Material Weakness/Noncompliance Criteria – Per HUD Notice PIH-2023-25 and 24 CFR §990.195(d), formula income is a key component in the calculation of the Operating Fund subsidy. HUD pre-populates this amount using the Authority’s FY 2022 FASS-PH Financial Data Schedule (FDS) submission, if available. When pre-populated data is unavailable, the Authority must manually calculate formula income using FY 2022 financial information. Additionally, the add-on for the cost of the independent audit should also reflect the FY 2022 FDS amounts in accordance with HUD guidance. Condition – During our audit of the 2024 calendar funding year, we noted the Authority had used the audited FDS balances from the 2023 year instead of the 2022 year as required by HUD notice 2023-25. This resulted in formula income being overstated by $101,365. In addition, the add-on amount for the cost of the independent audit was also imputed from the 2023 FDS submission instead of the 2022 FDS balance which was a difference of $7,453. Cause – The Authority did not follow HUD’s published instructions in Notice PIH-2023-25 regarding the required reference year for financial data used in preparing HUD Form 52723. Effect – The Authority’s subsidy calculation was not prepared in accordance with HUD requirements, resulting in noncompliance and a potential misstatement of Operating Fund revenue in the amount of $108,818. Recommendation – We recommend the Authority carefully review the applicable Operating Subsidy Processing Notice each year and ensure that the HUD Form 52723 is prepared using the correct FDS reference year, as required. View of Responsible Official: Management agrees with the Finding.

Finding 2025-001 Special Tests and Provisions over Formula Income Public Housing Program, Assistance Listing #14.850 Material Weakness/Noncompliance Criteria – Per HUD Notice PIH-2023-25 and 24 CFR §990.195(d), formula income is a key component in the calculation of the Operating Fund subsidy. HUD pre-populates this amount using the Authority’s FY 2022 FASS-PH Financial Data Schedule (FDS) submission, if available. When pre-populated data is unavailable, the Authority must manually calculate formula income using FY 2022 financial information. Additionally, the add-on for the cost of the independent audit should also reflect the FY 2022 FDS amounts in accordance with HUD guidance. Condition – During our audit of the 2024 calendar funding year, we noted the Authority had used the audited FDS balances from the 2023 year instead of the 2022 year as required by HUD notice 2023-25. This resulted in formula income being overstated by $101,365. In addition, the add-on amount for the cost of the independent audit was also imputed from the 2023 FDS submission instead of the 2022 FDS balance which was a difference of $7,453. Cause – The Authority did not follow HUD’s published instructions in Notice PIH-2023-25 regarding the required reference year for financial data used in preparing HUD Form 52723. Effect – The Authority’s subsidy calculation was not prepared in accordance with HUD requirements, resulting in noncompliance and a potential misstatement of Operating Fund revenue in the amount of $108,818. Recommendation – We recommend the Authority carefully review the applicable Operating Subsidy Processing Notice each year and ensure that the HUD Form 52723 is prepared using the correct FDS reference year, as required. View of Responsible Official: Management agrees with the Finding.