FAC Explorer

Audit 405984

FY End
2025-09-30
Total Expended
$5.51M
Findings
1
Programs
3
Organization: Sterling Heights Housing Commission (MI)
Year: 2025 Accepted: 2026-06-30
Auditor: HENDERSON & PILLETERI LLC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
1221724 2025-001 Material Weakness Yes A

Programs

ALN Program Spent Major Findings
14.850 PUBLIC HOUSING OPERATING FUND $2.90M Yes 1
14.872 PUBLIC HOUSING CAPITAL FUND $2.53M Yes 0
14.870 RESIDENT OPPORTUNITY AND SUPPORTIVE SERVICES - SERVICE COORDINATORS $72,319 Yes 0

Contacts

Name Title Type
VKBSED69PZF1 Wanda Allen Auditee
9316472303 Roy W. Henderson Jr. Auditor
No contacts on file

Notes to SEFA

The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award activity of the Authority under programs of- the federal government for the year ended September 30, 2025. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Authority, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Authority.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The Authority has elected to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance.

Finding Details

Finding 2025-001
2025-001– ALN 14.850 – Public Housing Operating Fund – Activities Allowed or Unallowed Condition and Criteria: The Authority expended $1,977,517 of its operating subsidy on capital purchases, representing more than 20% of the total operating subsidy received. Applicable funding regulations and grant compliance requirements stipulate that operating subsidies must be used primarily for eligible operating expenses. Generally, regulations limit the percentage of operating funds that can be used for capital expenditures to no more than 20%, unless prior approval has been obtained from the funding agency. Amount of Questioned Costs. $1,977,517 resulting in unallowable costs created over years. Cause: The over-expenditure appears to have resulted from inadequate monitoring and control over budget allocations as the result of a HUD freeze on the Authority’s Capital Fund Grant. As well as a lack of clear internal procedures to ensure compliance with funding restrictions governing the use of operating subsidies. Effect: The Authority's use of operating subsidy funds in excess of allowable limits while under HUD restrictions resulted in noncompliance with funding requirements. This may subject the Authority to potential repayment obligations, questioned costs totaling $1,977,517, and increased scrutiny from oversight agencies. Auditor’s Recommendation: The Authority should strengthen internal controls over financial management to ensure operating subsidy funds are used in accordance with program requirements. This includes implementing formal review procedures, tracking expenditures against allowable thresholds, and seeking prior approval when necessary for capital-related expenditures. It is recommended that while under any type of HUD review or freeze of grant subsidy the Authority only use funds for necessary upkeep of its capital assets. Grantee Response: Management acknowledges the finding and will implement enhanced monitoring controls and staff training to ensure compliance with subsidy usage limitations moving forward. The Authority is now drawing down its CFP and is not using operating funds for CFP activities.