2025-005 Allowability – Interprogram Activity Public Housing Operating Fund ALN 14.850 Significant Deficiency in Internal Control Other matter required to be reported in accordance with Uniform Guidance Condition: The Authority maintains a material interprogram receivable balance in the asset manage...
2025-005 Allowability – Interprogram Activity Public Housing Operating Fund ALN 14.850 Significant Deficiency in Internal Control Other matter required to be reported in accordance with Uniform Guidance Condition: The Authority maintains a material interprogram receivable balance in the asset management program (“AMP”), which is due from other programs of the Authority. This interprogram receivable increased by $373,091 from the September 30, 2024 balance of $433,981, for a total receivable balance of $807,072 as of September 30, 2025. Auditor Recommendations: We recommend that the Authority immediately discontinue using Public Housing Operating Fund resources to fund costs or cash shortfalls of other programs or component units. The Authority should prepare a detailed reconciliation of all interprogram receivable and payable balances by program and implement a repayment plan to restore the Public Housing Operating Fund. We further recommend that the Authority implement written cash management and interprogram accounting procedures to prevent future unauthorized advances. These procedures should include monthly reconciliation of all interprogram balances, supervisory review, and approval of interprogram activity. Management Response: Management acknowledges and accepts responsibility for the deficiencies in internal control over allowability and eligibility and are committed to implementing corrective actions that address missing documentation and lack of verifiable procurement procedures to ensure compliance. Reconcile intercompany balances • CHA is currently working with its fee accountant to complete this process Cease Additional Borrowing • Effective immediately, CHA will discontinue the practice of increasing interprogram borrowings from AMP 1 except where expressly authorized by HUD regulations. Implementing a Repayment Plan • CHA will implement a repayment plan to prioritize repayment from unrestricted or otherwise eligible funding sources in compliance with HUD requirements. Monthly Interprogram Reconciliation • Finance staff and fee accountant will reconcile all interprogram receivable and payable balances monthly. • Any new interprogram activity will be reviewed by the Executive Director and Fee Accountant to ensure allowability before recording. Strengthen Budget Monitoring • Management will perform monthly budget-to-actual reviews for every program to identify operating deficits before they require interprogram borrowing. • Programs experiencing budget shortfalls will implement corrective spending measures or identify alternative eligible funding sources. Improve Cash Flow Management • With the assistance of the fee accountant, CHA will prepare monthly cash flow projections for each program to monitor liquidity and prevent the use of restricted Public Housing Operating Funds for other programs. Implement Internal Control Procedures • Written procedures governing interprogram transactions will be incorporated into the Authority's financial policies. • All interprogram transactions will require documentation supporting the purpose, funding source, and regulatory allowability. Oversight by Fee Accountant • The Authority's Fee Accountant will review interprogram balances during monthly financial statement preparation and report unusual activity or growing receivable balances to management. Board Oversight • The Board of Commissioners will receive monthly financial reports that include interprogram receivable and payable balances to provide ongoing oversight of repayment progress and compliance. Monitoring • The Executive Director and Finance Department will monitor compliance with this corrective action plan monthly and adjust operating budgets as necessary to eliminate future interprogram borrowing. Name of Responsible Person(s): Jackie Otto, Executive Director, Sherdana Wade, Director of Operations, Michelle Guidry, Finance Director Projected Completion Date: Some of the corrective activities are underway. We anticipate full compliance ahead of the June 30, 2027 audited submission.