Finding Text
Federal Agency: U.S. Department of Housing and Urban Development
Pass-through Agency: N/A
Federal Program Title: Housing Choice Voucher Section-8, IPA number RQ54
CFDA Number: 14.871
Compliance Requirement:
Type of Finding: Material Noncompliance Reporting and Material Weakness
Responsible Official: Federal Program Director
Condition: The accounting system for the Housing Choice Voucher program is maintained independently from the Municipality’s accounting system. As these systems are not reconciled with each other, discrepancies persist at year-end, complicating the auditor’s task of achieving accurate and reliable balances in order to meet the deadlines for issuing the required reports to the Department of Housing and Urban Development.
Criteria: The § 902.33 Financial reporting requirements states the following:
(a) Annual financial report. All PHAs must submit their unaudited and audited financial data to HUD on an annual basis. The financial information must be:
(1) Prepared in accordance with Generally Accepted Accounting Principles (GAAP), as further defined by HUD in supplementary guidance; and
(2) Submitted electronically in the format prescribed by HUD using the Financial Data Schedule (FDS). (b) Annual unaudited financial information report filing dates. The unaudited financial information to be submitted to HUD in accordance with paragraph (a) of this section must be submitted to HUD annually, no later than 2 months after the PHA's fiscal year end, with no penalty applying until the 16th day of the 3rd month after the PHA's fiscal year end, in accordance with § 902.62.
(c) Annual audited financial information compliance dates. Audited financial statements will be required no later than 9 months after the PHA's fiscal year end, in accordance with the Single Audit Act and 2 CFR part 200, subpart F.
Questioned Cost: None determined
Cause: Due to the lack of reconciliation between Municipality and Housing Choice Voucher systems, discrepancies accumulate at year-end, complicating the auditor’s ability to produce reliable balances. This, in turn, poses challenges in meeting the deadlines for the submission of required reports to the Department of Housing and Urban Development.
Effect: The Municipality make more difficult for the auditors to obtain reliable balances for the Single Audit. This situation could affect the continuance and new approvals of federal program funds.
Recommendation: The Municipality must conduct a reconciliation of its systems against Housing Choice Voucher at least every two months to clarify any uncertainties and to anticipate or detect any discrepancies in a timely manner. This proactive approach will help ensure that a situation like this does not recur.
Identification of a repeat finding: This is not a repeat finding from previous year.