Audit 48079

Section III ? Federal Award Findings and Questioned Costs 2022-003 Activities Allowed or Unallowed ?Capital Fund Program (Identical of 2022-002) Condition: The Authority expended ineligible funds from the Capital fund Program that were not supported for the use and administration of the program. Criteria: In PIH Notice 2020-07, HUD noted that PHAs may encounter higher costs to administer Capital Fund grants because of the substantial challenges of having to do most of the work remotely. To provide accommodation for this possible constraint, HUD is waiving the Administration cost limitation established in 24 CFR 905.314(h) of 10 percent and temporarily resetting it to 15 percent. Context: During our analysis of Capital Funds, we noted that the Authority charged $76,054 in administrative salary costs to the Capital Fund Program during the current fiscal year. This, compared to the administrative salary amount charged to Operating Fund in the amount of $63,256, is $12,798 higher. This exceeded the prior fiscal year amount of $9,994 charged to administrative salaries in the Capital Fund Program by $66,060. The Authority was unable to provide support that these costs were associated with the administration and management of the Capital Fund Program. Based on the discussions and transactions recorded, this appeared to be a method of shifting Operating Fund costs to the Capital Fund Program. Effect: The Authority did not use the Capital Fund monies for eligible administrative expenses. Questioned Costs: The amount of questioned costs determined to be ineligible was $66,637. Recommendation: It is recommended that the Authority review the Capital Fund Program requirements to ensure all funds are spent on eligible activities. Administrative costs charged to the Capital Fund Program should be supported to verify that the costs are related to the management of the Capital Fund Program. Response: The email received from HUD regarding CARES and CFP was misinterpreted by the Housing Authority and after reviewing with the fee accountant, the fee accountant misinterpreted the information, thus provided inaccurate information on how to expend funds. The Housing Authority will review all disbursements monthly and consult with the fee accountant as to the purpose and nature of any costs that could be deemed as questionable or allowable under the Capital fund Program. In addition, the Housing Authority will ensure that all disbursements are adequately supported and can be easily traced to any LOCCS draw. We will also be requesting a budget revision.

Section III ? Federal Award Findings and Questioned Costs 2022-003 Activities Allowed or Unallowed ?Capital Fund Program (Identical of 2022-002) Condition: The Authority expended ineligible funds from the Capital fund Program that were not supported for the use and administration of the program. Criteria: In PIH Notice 2020-07, HUD noted that PHAs may encounter higher costs to administer Capital Fund grants because of the substantial challenges of having to do most of the work remotely. To provide accommodation for this possible constraint, HUD is waiving the Administration cost limitation established in 24 CFR 905.314(h) of 10 percent and temporarily resetting it to 15 percent. Context: During our analysis of Capital Funds, we noted that the Authority charged $76,054 in administrative salary costs to the Capital Fund Program during the current fiscal year. This, compared to the administrative salary amount charged to Operating Fund in the amount of $63,256, is $12,798 higher. This exceeded the prior fiscal year amount of $9,994 charged to administrative salaries in the Capital Fund Program by $66,060. The Authority was unable to provide support that these costs were associated with the administration and management of the Capital Fund Program. Based on the discussions and transactions recorded, this appeared to be a method of shifting Operating Fund costs to the Capital Fund Program. Effect: The Authority did not use the Capital Fund monies for eligible administrative expenses. Questioned Costs: The amount of questioned costs determined to be ineligible was $66,637. Recommendation: It is recommended that the Authority review the Capital Fund Program requirements to ensure all funds are spent on eligible activities. Administrative costs charged to the Capital Fund Program should be supported to verify that the costs are related to the management of the Capital Fund Program. Response: The email received from HUD regarding CARES and CFP was misinterpreted by the Housing Authority and after reviewing with the fee accountant, the fee accountant misinterpreted the information, thus provided inaccurate information on how to expend funds. The Housing Authority will review all disbursements monthly and consult with the fee accountant as to the purpose and nature of any costs that could be deemed as questionable or allowable under the Capital fund Program. In addition, the Housing Authority will ensure that all disbursements are adequately supported and can be easily traced to any LOCCS draw. We will also be requesting a budget revision.