Finding Text
2024-001 ALN 14.850 – Public Housing Operating Fund – Activities Allowed, Unallowed
Condition and Criteria:
24 CFR 990.280(b) permits the use of Public Housing Operating Fund (PHOF) for specific project related operating expenses. It does not permit such amounts to be loaned to related parties.
In prior years, the Authority had loaned PHOF monies to related parties. As of September 30, 2024, $98,663 of PHOF loans remain outstanding to discretely presented component units of the Authority. $126,892 remains outstanding to other programs of the Authority, $100,642 of which was loaned to the Business Activities program which houses the Authority's non-federal funds.
Amount of Questioned Costs:
$199,305
Context:
The Authority’s Public Housing Operating Fund has miscellaneous receivables from Edgefield Senior Housing, LLC, Valley Homes, LLC, and other related parties in the amounts of $9,152, $22,459, and $67,052, respectively. The Public Housing Program is also due $100,642 from the Business Activities program.
Cause:
Management of the Authority in prior years (who were different individuals than the current management of the Authority) either did not understand or did not follow federal guidelines.
Effect:
Public Housing monies were used for unallowed purposes.
Auditor’s Recommendation:
The management of the Authority should continue to pursue collection of these amounts.
Grantee Response:
The Authority has developed procedures to ensure that restricted funds are repaid to the Low Rent Program and to ensure that further restricted funds are not advanced. Upon notification from the Department of Housing and Urban Development to cease and desist of the Authority’s cost sharing agreement, the Authority immediately discontinued the advancement of funds to other programs operated by the Authority. Current management is actively pursuing collection efforts and understands these federal guidelines.