Finding 1073769 (2023-002)

Finding No. 2023-002 Noncompliance with Activities Allowed or Unallowed (Public Housing Program ALN 14.850) Criteria: Uniform Guidance and HUD Regulations require the Authority to establish an effective cost allocation for indirect costs and charge direct costs to each program that the costs are allocable to. For shared costs paid out of the Public Housing Program, reimbursements should be made to the Public Housing Program on a timely basis. Condition: During the year, the Authority paid for all of the Gas usage for the Section 8- New Construction Units and all of the workers compensation premiums out of Public Housing. Other indirect costs that were properly allocated and paid for by Public Housing was not timely reimbursed to Public Housing. The total due to Public Housing from the Section 8-New Construction program as of December 31, 2023 was $175,191. Questioned Costs: $36,083 Effect: The Authority did not properly follow the requirements of the Uniform Guidance in relation to Cost Principles specified within 2 CFR Part 200 Subpart E. Cause: The Authority’s staff did not have an adequate understanding of accounting principles whereby costs of each individual program were either charged directly or indirectly to the appropriate program. The Authority did not make timely reimbursements for allocated costs paid by its Public Housing Program for its Section 8 – New Construction Program. Recommendation: The Authority’s staff should familiarize themselves with requirements of the Uniform Guidance as it related to Cost Principles. Management Response: Management will ensure that future program costs are reviewed to determine whether each cost is either a direct cost or indirect cost and have it charged to the appropriate program.