Finding Text
2024-003 Special Tests and Provisions – UEL Formula (Form 52722) and Formula Income
Public and Indian Housing Program – CFDA 14.850
Material Weakness in Internal Control and Material Noncompliance
This is a repeat finding of 2023-004 from March 31, 2023 (originally reported as finding 2022-005 from March 31, 2022)
Criteria: The Authority receive invoices for utilities. The consumption and cost data from those invoices are aggregated, in an Excel workbook or other platform, commonly referred to as a utility ledger. The aggregated data is transferred to Form 52722 to calculate the utility expense level (UEL). The UEL is a primary component of the operating subsidy grant revenue of the Authority, which is calculated on Form 52723. Form 52723 uses a formula to calculate the Operating Fund Revenue for the Authority. The calculation is generally based on prepopulated data calculated by HUD. However, in some cases, the formulaic fields are not prepopulated. Form 52722 and 52723 need to be reported correctly to ensure the operating subsidy grant revenue is calculated correctly for the future period.
Condition: Unable to test HUD Form 52722, 52723, and the utility ledger for accuracy and completion.
Cause: Former employees of the Authority did not retain the utility ledger.
Effect: The Authority did not retain the utility ledger as required by HUD. The Authority is not in compliance with this reporting requirement. Failure to properly maintain records could lead to significant issues in funding.
Questioned Cost: None
Recommendation: The Authority should retain the utility ledger for each fiscal year under audit.
Views of Responsible Officials of the Auditee: We concur with the recommendation. Due to the ongoing COVID-19 pandemic and related staff absences and turnover, we were not able to retain the utility ledger. We will retain the utility ledger for each fiscal year under audit.