FAC Explorer

Audit 412153

FY End
2025-12-31
Total Expended
$3.22M
Findings
1
Programs
2
Organization: Gallatin Housing Authority (TN)
Year: 2025 Accepted: 2026-09-25
Auditor: SMITH MARION & CO

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
1236602 2025-003 Material Weakness Yes C

Programs

ALN Program Spent Major Findings
14.872 PUBLIC HOUSING CAPITAL FUND $1.84M Yes 1
14.850 PUBLIC HOUSING OPERATING FUND $1.38M Yes 0

Contacts

Name Title Type
DPLVC9Z7HJA4 Michael Bates Auditee
6154521661 Cole Monroe Auditor
No contacts on file

Notes to SEFA

The accompanying schedule presents the expenditures incurred (and related awards received) by Gallatin Housing Authority (the Authority) that are reimbursable under federal programs of federal agencies providing financial assistance awards. For the purpose of this schedule, only the portion of the program expenditures reimbursable with such federal funds is reported in the accompanying schedule. Program expenditures in excess of the maximum federal reimbursement authorized or the portion of the program expenditures that were funded with local or other nonfederal funds are excluded from the accompanying schedule. This schedule also only includes the amounts expended by the Authority, none of the amount expended, if any, by the blended or discretely present component units have been included.
The expenditures included in the accompanying schedule were reported on the accrual basis of accounting. Expenditures are recognized in the accounting period in which the related liability is incurred. Expenditures reported included any property or equipment acquisitions incurred under the federal program. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements.
The Authority has not elected to use the 15% de minimis indirect cost rate as allowed in the Uniform Guidance, section 414.

Finding Details

Finding 2025-003
Criteria: Under 24 CFR § 905.306, Capital Fund Program grant funds are made available to a Public Housing Authority through an Annual Statement/Budget that is subject to HUD review and approval. Until HUD approval is obtained, the Authority is not authorized to obligate or expend grant funds. Additionally, 2 CFR § 200.302(b)(6) requires recipients to maintain records that adequately identify the source and application of federally funded activities, and financial reporting must accurately reflect the status of federal awards. Condition: During our audit, we noted that the Authority recorded a Capital Fund Program accounts receivable and recognized related grant revenue for a Capital Fund grant year that had not received HUD approval of the Annual Statement/Budget as of fiscal year-end. Because the budget had not been approved, the Authority was not authorized to access or obligate the funding, and the receivable and revenue recognition were premature. Context: Prior to the audit, the Authority recorded $412,400 in revenue related to 2026 CFP. As of fiscal year-end, the 2026 Capital Fund Program budget had not been approved by HUD, and the final grant award amount was unknown. Therefore, the Authority had not established an entitlement to the funding, and the related revenue and receivable were improperly recognized. Cause: Management did not have adequate procedures in place to verify HUD approval of Capital Fund budgets prior to recording related receivables and revenue in the general ledger. Effect: As a result, Capital Fund grant revenue were overstated by approximately $338,062 at fiscal year-end. This resulted in a misstatement of the Authority's financial statements and did not accurately reflect the status of available federal funding. Recommendations: We recommend that management implement procedures to verify HUD approval of Capital Fund Program Annual Statements/Budgets prior to recording related receivables and revenue. Grant revenue and receivables should only be recognized when the Authority has met all applicable requirements establishing its entitlement to the funding. Questioned Costs: $338,062. Management Views: The auditee acknowledges the deficiency in enforcing Housing Quality Standards (HQS) as highlighted in the finding. In response to this issue, the management commits to implementing a comprehensive Corrective Action Plan.