Audit 369561

2024-001 - Special Tests: Material Wekness Name of Federal Agency: United States Department of Housing and Urban Development Federal Program Name: Public Housing Operating Fund Assistance Listing Number: FALN #14.850 Federal Award Identification Number and Year: CT019-00000124D; 2024-Name of Pass-through Entity (if applicable): not Applicable Material Weakness in Internal Control; Material Noncompliance Criteria HUD regulations for Computation of Utilities Expense Level - UEL (24 CFR § 990.170), require the public housing authority to retain data pursuant to 24 CFR § 990.325. PHAs receive invoices for utilities. The consumption and cost data from those invoices are aggregated, in an Excel workbook or other platform, commonly referred to as a utility ledger. The aggregated data is transferred to Form 52722. Condition The results of our testing of Form 52722 reporting requirements for funding period 01/01/2024 through 12/31/2024 (utility consumption period 7/1/2022 through 6/30/2023) indicated the following errors: - In one instance, a utility invoice date was changed after the submission date resulting in the invoice being included in multiple years' submissions. - In four instances, the utility invoice amount allocated to the Public Housing Operating Fund changed after the submission date. - In eighteen instances, there were variances between the utility invoice amount and the utility cost reported on Form 52722. - In seven instances, there were variances between the utility invoice consumption amount and the consumption amount reported on Form 52722. - In seven instances, the incorrect unit of measure was used on Form 52722. Questioned Costs Not determinable. Context We selected a sample of 30 utility invoices for review. Our sample was a statistically valid sample. Effect or Possible Effect There are variances between the utility invoices and Form 52722. Therefore, the report submission is inaccurate. Cause Greenwich Communities’ internal controls were not adequate to ensure that the information reported in Form 52722 was complete and accurate. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation We recommend that Greenwich Communities improve its internal processes to ensure all updates made to the utility invoices are reflected in Form 52722 as well as ensuring information reported in Form 52722 is accurate for the time period being reported. Greenwich Communities' Response This finding is mainly due to delays in the processing/payment of utility invoices which was in part attributed to staff shortage in accounts payable and increase in the number of properties under management, whereby the volume of utility invoices increased. In August 2024, we hired an accountant where his responsibilities include the accounting for utility expenses. We have implemented additional procedures to straighten utility processing to ensure invoices are processed/paid timely including a process to maintain monthly analysis of utility expenses to track invoices and to ensure invoices are processed timely and/or accrued. We also perform variance analysis of expenses whereby significant variations are investigated and resolved. Effective for 2024/2025 utility cost reporting, we have implemented a robust review process whereby the utility cost reports will be prepared by the staff accountant, reviewed by the Controller with final approval by the Chief Financial Officer. We understand that given the timing, this may be a repeat finding for fiscal year December 31, 2025.