Finding Text
Program: Public Housing Capital Fund
Requirement: When expending capital funds the Authority cannot expend nonfederal funds first to pay the applicable bills and then use Capital Funds to reimburse themselves (Capital Fund Handbook).
Condition: During review of capital fund cash management procedures it was determined that the Authority was using non-federal funds to pay for Capital Fund expenditures and then drawing Capital Funds to reimburse itself.
Cause: The Authority does not have the appropriate internal controls in place to ensure that Cash Management procedures are done in accordance with HUD requirements.
Effect: Capital Fund cash management draws are not being completed in accordance with the Capital Fund Handbook requirements.
Questioned Cost: Not applicable.
Information: Sampling was statistically valid and a systemic problem.
Prior Year Finding: New deficiency in the current year.
Recommendation: It is recommended that the Authority implements and applies the appropriate controls to ensure that Cash Management draws are being done in accordance with the HUD Capital Fund Handbook.
Management’s Response: In response to these findings, the Authority has reviewed and revised its Capital Fund cash management procedures to ensure full compliance with the Capital Fund Handbook. The updated procedures have been reviewed in collaboration with both the Housing Project Manager and the Housing Program Manager. Invoices will be organized to fulfil the monthly obligation and paid within three days of the fund draw. To prevent recurrence and ensure ongoing compliance, the Authority will hold monthly meetings to review project timelines and cash flow needs. Communication frequency will increase during complex, multi-phase projects to support effective oversight and coordination. Furthermore, updated policy and payment procedures will be clearly communicated to all current and future vendors to ensure alignment with federal regulations. These corrective actions reflect the Authority’s commitment to improved financial oversight and adherence to all applicable funding regulations.