FAC Explorer

Audit 514

FY End
2022-12-31
Total Expended
$5.17M
Findings
4
Programs
2
Organization: Town of Hempstead Housing Authority (NY)
Year: 2022 Accepted: 2023-10-11
Auditor: Rbt CPAS

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
289 2022-001 Material Weakness Yes C
290 2022-002 Significant Deficiency - N
576731 2022-001 Material Weakness Yes C
576732 2022-002 Significant Deficiency - N

Programs

ALN Program Spent Major Findings
14.850 Public and Indian Housing $3.53M Yes 2
14.872 Public Housing Capital Fund $1.64M - 0

Contacts

Name Title Type
NLJJZLAXN863 Edward Cumming Auditee
5164859666 Joseph Montalto Auditor
No contacts on file

Notes to SEFA

Title: 3. RECONCILIATION TO FINANCIAL STATEMENTS Accounting Policies: 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying Schedule of Expenditures of Federal Awards (the Schedule ) includes the federal grant activity of the Town of Hempstead Housing Authority (the Authority ) for the year ended December 31, 2022. Federal Awards received directly from Federal agencies, as well as Federal awards passed through other governmental agencies, are included in the Schedule. The information in the 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. De Minimis Rate Used: N Rate Explanation: 2. INDIRECT COST RATE The Authority has elected not to use the 10 percent de minimus cost rate as allowed under the Uniform Guidance. The expenditures presented in the Schedule of Expenditures of Federal Awards reconcile to the federal aid reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds as follows: Federal expenditures as reported in the SEFA: Reconciling items: $ 5,167,321 Capital grants (1,230,364) Federal aid as reported in the Statement of Revenues, Expenses, and Changes in Net Position as Government Operating Grants $ 3,936,957

Finding Details

Finding 2022-001
2022-001 COCC U.S Department of Housing and Urban Development 14.850 Public and Indian Housing Condition: The Authority continues to run a deficit in the Central Office Cost Center (COCC) primarily because of legacy costs (Health Insurance and Pension costs) associated with former employees, as required by long term state contracts. COCC has expended Low Income Public Housing (LIPH) funds to support the COCC operations in violation of Federal Rules and Regulations. Through the year ended December 31, 2022, the Authority has accumulated in excess of $5,487,478, in COCC administrative operating costs above those normally covered by management fees, capital asset fees ad bookkeeping fees. Though it appears that overall the Authority does not have a Going Concern issue as a result of HUD s commitment in accordance with the Annual Contributions Contract (ACC) with housing authorities for the subsequent twelve (12) months, by continuing to operate the COCC with negative cash flow over an extended period of time, the COCC will continue to use LIPH funds in violation of HUD rules. It was noted that the amount owed to the LIPH program decreased in the current year. This is a repeat of finding 2021-001. Criteria: OMB-87 regarding eligible and ineligible costs. Cause: The Authority has not established controls to ensure proper accounting for cash balances pertaining to Asset Management Projects and continues to use a central checking system to disburse funds. There is also a lack of oversight and long-range planning in accordance with HUD s requirements. Effect: The Authority was not in compliance with the allowable costs criteria for the federal program. Questioned Costs: $0 Recommendation: We recommend that the Authority establish internal control procedures over the budgeting process sufficient to ensure that each program operates both in accordance with its budget and within its means, and for the Authority to provide a work-out plan for the COCC to substantially reduce its costs or to generate additional revenue. PHA Response and Corrective Action Plan: See corrective action plan.
Finding 2022-002
2022-002 Project-Based Budgeting and Accounting U.S Department of Housing and Urban Development 14.850 Public and Indian Housing Condition: During review of the Authority s budgeting process, it was noted that the Board did not approve the 2022 fiscal year budget until March 2022. The Authority is required to complete and approve the budget before the start of the fiscal year. Criteria: PHAs implementing asset management shall develop and maintain a system of budgeting and accounting for each project in a manner that allows for analysis of actual revenues and expenses. Prior to the beginning of the fiscal year, a PHA is required to prepare an operating budget and the PHA s Board of Commissioners is required to review and approve the budget by resolution. Cause: The Authority was transitioning between accountant s during the budgetary process. Effect: The Authority was not in compliance with the project-based budgeting and accounting requirement. Questioned Costs: $0 Recommendation: We recommend that the Authority establish internal control procedures over the budgeting process sufficient to ensure that the budget is prepared and approved timely. PHA Response and Corrective Action Plan: See corrective action plan.
Finding 2022-001
2022-001 COCC U.S Department of Housing and Urban Development 14.850 Public and Indian Housing Condition: The Authority continues to run a deficit in the Central Office Cost Center (COCC) primarily because of legacy costs (Health Insurance and Pension costs) associated with former employees, as required by long term state contracts. COCC has expended Low Income Public Housing (LIPH) funds to support the COCC operations in violation of Federal Rules and Regulations. Through the year ended December 31, 2022, the Authority has accumulated in excess of $5,487,478, in COCC administrative operating costs above those normally covered by management fees, capital asset fees ad bookkeeping fees. Though it appears that overall the Authority does not have a Going Concern issue as a result of HUD s commitment in accordance with the Annual Contributions Contract (ACC) with housing authorities for the subsequent twelve (12) months, by continuing to operate the COCC with negative cash flow over an extended period of time, the COCC will continue to use LIPH funds in violation of HUD rules. It was noted that the amount owed to the LIPH program decreased in the current year. This is a repeat of finding 2021-001. Criteria: OMB-87 regarding eligible and ineligible costs. Cause: The Authority has not established controls to ensure proper accounting for cash balances pertaining to Asset Management Projects and continues to use a central checking system to disburse funds. There is also a lack of oversight and long-range planning in accordance with HUD s requirements. Effect: The Authority was not in compliance with the allowable costs criteria for the federal program. Questioned Costs: $0 Recommendation: We recommend that the Authority establish internal control procedures over the budgeting process sufficient to ensure that each program operates both in accordance with its budget and within its means, and for the Authority to provide a work-out plan for the COCC to substantially reduce its costs or to generate additional revenue. PHA Response and Corrective Action Plan: See corrective action plan.
Finding 2022-002
2022-002 Project-Based Budgeting and Accounting U.S Department of Housing and Urban Development 14.850 Public and Indian Housing Condition: During review of the Authority s budgeting process, it was noted that the Board did not approve the 2022 fiscal year budget until March 2022. The Authority is required to complete and approve the budget before the start of the fiscal year. Criteria: PHAs implementing asset management shall develop and maintain a system of budgeting and accounting for each project in a manner that allows for analysis of actual revenues and expenses. Prior to the beginning of the fiscal year, a PHA is required to prepare an operating budget and the PHA s Board of Commissioners is required to review and approve the budget by resolution. Cause: The Authority was transitioning between accountant s during the budgetary process. Effect: The Authority was not in compliance with the project-based budgeting and accounting requirement. Questioned Costs: $0 Recommendation: We recommend that the Authority establish internal control procedures over the budgeting process sufficient to ensure that the budget is prepared and approved timely. PHA Response and Corrective Action Plan: See corrective action plan.