Finding Text
Finding 2022-003: Rolling Forward Equity Balances (Material Weakness)
Federal Agency: U.S. Department of Housing and Urban Development (“HUD”)
Assistance Listing No. 14.871, Section 8 Housing Choice Vouchers Criteria:
PHAs are required to maintain complete and accurate accounts. HUD enters into an Annual Contributions Contract (“ACC”). The ACC requires the PHA to properly account for program activity. Proper accounting requires that (1) account balances are properly maintained, (2) records and accounting transactions support a proper roll-forward of equity, and (3) errors are corrected as detected Condition:
The unaudited year end working trial balance reflected total positive equity of $1,057,829 and did not reflect correct HAP and Administrative Fee equity balances. This condition continues from previous years. Reference prior year finding 2021-002. Cause:
PHA management is not making the proper entries to ensure the HAP and Administrative Fee equity balances are stated correctly.
Effect:
This could result in the PHA not being funded correctly and may result in HUD’s Office of Inspector General findings against the PHA. Questioned Costs:
None
Recommendation:
PHA management must close the books each year and ensure that the HAP and Administrative Fee equity accounts are properly stated.
Management’s Views and Corrective Action Plan:
Management’s views and corrective action plan are included at the end of this report.