Finding Text
2024-003 – PERIOD OF PERFORMANCE
Significant Deficiency/Other Noncompliance
U.S. Department of Housing and Urban Development
ALN #: 14.872 – Public Housing Capital Fund
CRITERIA
1. Obligations - Unless an extension is approved by HUD, a PHA must obligate at least 90 percent of each Capital Fund grant, including formula grants, non-accumulating RHF, natural disaster, and lead-based paint grants within 24 months of the funds becoming available to the PHA for obligation. For emergency grants, safety and security grants and safety and security-carbon monoxide grants, the PHA must obligate at least 90 percent within twelve months of the funds becoming available. The funds become available when HUD executes the Annual Contributions Contract (ACC) Amendment (24 CFR section 905.306).
2. Expenditures - For Capital Fund formula, RHF, natural disaster, and lead-based paint grants, unless HUD approves an extension, a PHA must expend all grant funds no later than 48 months after HUD executes the ACC Amendment (24 CFR section 905.306(f)). However, for emergency grants, safety and security grants and safety and security-carbon monoxide grants, a PHA must expend all grant funds no later than 24 months after HUD
executes the ACC Amendment if such a requirement is contained in the ACC Amendment. A PHA must also expend 100% percent of the authorized amount of a Capital Fund grant within 48 months of the date that funds are made available, or the obligation start date. (24 CFR section 905.306).
3. Capital Funds for Operating Costs - Capital Funds transferred to operations (BLI 1406) are not considered obligated until the PHA has budgeted and drawn down the funds. To meet this requirement, the funds must be budgeted in line BLI 1406 (Operations) and the PHA must submit the voucher request in LOCCS. The PHA’s reported obligation amount in LOCCS must be the same amount in the PHA’s accounting system since the date of the voucher request in LOCCS is the point of obligation for funds in BLI 1406. The voucher request date must occur before those funds are reported as obligated in LOCCS under the Obligation & Expenditure tab (24 CFR section 905.314(l)).
CONDITION
The Authority did not fully obligate and expend the Capital Fund Program grants and has not obligated at least 90 percent of the Capital Fund program grants within the 24-month deadline as follows:
2019 Capital Fund Program
2020 Capital Fund Program
2020 Emergency Capital Fund Program
In addition, the Authority did comply with the Capital Funds for Operating Costs requirement for 2019 Capital Fund Program.
CAUSE
The Authority was not aware of approaching obligation and expenditure deadlines and did not take appropriate or sufficient action to mitigate the loss of federal awards.
EFFECT
The Authority did not comply with the Period of Performance requirements.
QUESTIONED COSTS
None identified.
CONTEXT
The 2019 and 2020 CFP grant along with 2020 Emergency CFP grants were not obligated and expended within the applicable allowable period. The 2019 CFP grant funds transferred to operations were obligated before the voucher request was submitted.
REPEAT FINDING
Not a repeat finding.
RECOMMENDATION
We recommend that the Authority take immediate action to minimize the potential loss of Capital Fund Program grant funds and ensure that controls are in place to prevent deadlines from being missed for future Capital Fund grants. In addition, we recommend the grant fund voucher requests for operating transfers be submitted prior to funds being reported as obligated.
AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION
See Corrective Action Plan.