2024-004 Closing out of grants (Significant Deficiency) CFDA No.: 14.238 Agency: U.S. Department of Housing and Urban Development Criteria: Public Housing Authorities (PHA) are required to perform the procedures necessary to close out grants in a reasonable time frame after the grants have been fully expended. Condition: We noted that management of the Authority did not close out several fully-expended grants that related to older years as of June 30, 2024. Context: During our auditing of STEL grant expenditures, we noted that several fully-expended grants that related to older years were not duly closed out as of June 30, 2023. Upon inquiry with management, this assertion was confirmed. Effect: Management and the Board were not in compliance with the requirements of the Uniform Guidance. This noncompliance could have resulted in delays in the grant closing processes by HUD. Cause: Due to a change in management at the Authority and the training that was, and still is, required by management, older grants that were fully-expended were not duly closed out on a timely basis. Questioned costs: None. Repeat finding: This is a repeat finding. Recommendation: We recommend that management of the Authority review its processes for closing out all fully-expended grants with HUD to ensure that, in the future, when grants are fully expended, the close-out process begins shortly thereafter. Management’s response: The Authority has had some staff turnover over the past several years. A new executive director and a new account clerk were both hired within the past several years. Management was aware that several older grants were still shown as “open” and that the close-out procedures would have to be implemented at some point. Management is evaluating its processes and procedures related to closing out grants and is planning on implementing procedures to ensure grants are properly closed. Management plans on working with the newly hired fee accountant in the future to assist with the close out of grants that have been fully expended.
CFDA No.: 14.850 Agency: U.S. Department of Housing and Urban Development Criteria: Public Housing Authorities (PHA) implementing asset management must develop and maintain a system of budgeting and accounting for each project in a manner that allows for analysis of actual revenues and expenses associated with each property (24 CFR section 990.280(a)). Prior to the beginning of its fiscal year, a PHA is required to prepare an operating budget. The PHA’s Board of Commissioners is required to review and approve the budget by resolution. The approved Board resolution must be submitted to HUD (24 CFR section 990.315(a)). Condition: We noted that management of the Authority did not submit an operating budget by AMP location for the year ended June 30, 2024. Context: During our audit inquiries, we were informed that the Authority did not prepare an operating budget by AMP location for the year ended June 30, 2024. Effect: Management and the Board were not in compliance with the requirements of the Uniform Guidance. This noncompliance could have resulted in deficiencies in the Board’s monitoring related to revenues and expenses. Cause: Due to a change in management at the Authority, and due to a lack of training by the accounting personnel on accounting and the budgeting process, a budget by AMP location was not prepared for the year ended June 30, 2024. Questioned costs: None identifies. Repeat finding: This is a repeat finding. Recommendation: We recommend that management of the Authority work with its newly retained fee accountant to prepare an operating budget by AMP location. Management’s response: The Authority has had some staff turnover over the past several years. A new executive director and a new account clerk were both hired within the past several years. Management was aware that its budget was not prepare by AMP location. Management engaged the services of a fee-accountant subsequent to year-end who will assist with the budgeting process in the future. The fee engaged was just recently re-engaged subsequent to June 30, 2025 year end. Management is aware that general best practice is to have a budget adopted by the board prior to the beginning of each fiscal year, however since the fee accountant was retained after the beginning of the 2025-2026 fiscal year, the 2025-2026 budget will not be prepared and adopted by the board on a timely basis.
CFDA No.: 14.850 Agency: U.S. Department of Housing and Urban Development Criteria: Public Housing Authorities (PHA) are required to submit unaudited financial statement information through the REAC system within two months of the PHA’s fiscal year-end (24 CFRR section 5.801). Additionally, a PHA is required to submit its audited financial statements annually within nine months after its year-end (24 CFR section 5.801). Condition: We noted that management of the Authority did not submit its financial information in the REAC system in a timely manner nor did it submit audited financial statements to HUD in a timely manner. Context: During our audit of the Authority, we noted that management submitted its REAC and FDS reporting information after the due date as established by the terms of the grant. Additionally, the audited financial statements were not submitted prior to the due date. Effect: Management and the Board were not in compliance with the requirements of the Uniform Guidance. Cause: Due to a change in management at the Authority and the training that was, and still is, required by management, the FDS submission and the audited financial statements were not filed timely. Management of the Authority tasked with performing the FDS submission and tasked with providing updated, accurate financial information necessary to have an audit performed did not possess the requisite accounting knowledge to properly complete these tasks. Questioned costs: None. Repeat finding: This is a repeat finding. Recommendation: We recommend that management of the Authority review the deadlines for FDS submission and the financial statement submission and work with the newly retained fee accountant to ensure that these deadlines are met in the future. Management’s response: The Authority has had some staff turnover over the past several years. A new executive director and a new account clerk were both hired within the past several years. Management was aware that its submissions were not timely. Management engaged the services of a fee-accountant subsequent to year-end who will assist with these submission going forward. In order to submit and ensure integrity of the unaudited financial statements, the bank accounts reconciliations needed to be completed and account analysis performed. Management will continue to prioritize and remediate outstanding compliance obligations and develop a compliance catch-up plan to ensure timely account reconciliation and account analysis in the future. The fee accountant was not re-engaged to perform bank reconciliations and account analysis for the year ended June 30, 2025 until after June 30, 2025 year end. As a result, management expects this to be a repeat finding in the June 30, 2025 audit.
CFDA No.: 14.872 and 14.850 Agency: U.S. Department of Housing and Urban Development Criteria: Public Housing Authorities (PHA) are required to implement project-based practices related to their operating subsidy and capital grant. This includes making proper and timely requisitions of funding from the grants. Condition: We noted that management of the Authority did not, in all instances, make timely requisitions from its operating and capital grants. Additionally, when requisitions were made, the amounts were not calculated in accordance with HUD guidelines. Context: During our audit, we noted that the amounts drawn down for the operating grant and the capital grant were calculated incorrectly. The calculation used was not in conformity with HUD regulations. Additionally, we noted that management did not make these requisitions in a timely manner. Effect: Management and the Board were not in compliance with the HUD regulations. This noncompliance could have resulted in the Authority not receiving that total amount of grant funding to which it was entitled. Cause: Due to a change in management at the Authority, and due to a lack of training by the accounting personnel on accounting and the grant requisition process, grant funding was neither properly nor timely requisitioned for the year ended June 30, 2024. Questioned costs: None identified. Repeat finding: This is a repeat finding. Recommendation: We recommend that management of the Authority work with its newly retained fee accountant to better establish policies and procedures to ensure compliance with the grant requisition processes. Management’s response: The Authority has had some staff turnover over the past several years. A new executive director and a new account clerk were both hired within the past several years. Management is evaluating its processes and procedures related to grant requisitions and is planning on implementing procedures to ensure grants are requisitioned in the future. Additionally, management plant to work with its newly hired fee accountant in the future to ensure grant funds are properly requisitioned.