Finding 1054798 (2023-004)

Material Weakness Finding 2023-004 (repeated from 12/31/2022) Statement of Condition: It was noted during the audit, capital funds had not been properly obligated or expended for the following capital grants: 2017 – not fully expended within 48 months of the funds becoming available 2018 – 90% not obligated within 24 months and not fully expended within 48 months of the funds becoming available 2019 – 90% not obligated within 24 months of the funds becoming available 2020 – 90% not obligated within 24 months of the funds becoming available 2021 – 90% not obligated within 24 months of the funds becoming available Criteria: H. PERIOD OF PERFORMANCE, N. SPECIAL TESTS AND PROVISIONS ITEM 3. OBLIGATION AND EXPENDITURE VERIFICATION: 24 CFR section 905.306 requires a PHA to obligate at least 90% of each Capital Fund grant within 24 months of the funds becoming available to the PHA for obligation and the PHA must expend 100% of each Capital Fund grant within 48 months of the funds becoming available. Perspective Information: The Commission did not have effective internal controls pertaining to the obligation and expenditure of capital grants. Questioned Costs: $218,104. Effect: The Commission is not in compliance with the period of performance and special tests and provisions, obligation and expenditure verification sections above. Cause: Lack of internal controls over capital grant requirements. Recommendation: The Commission should review the obligation and expenditure of capital grants on an ongoing basis and implement policies and procedures to ensure all federal compliances are followed pertaining to obligation and expenditures verification. Management’s Response: New Management has taken over as of March 2023 and will review and implement stronger policies and procedures pertaining to capital fund grants.