Finding Text
Housing Voucher Cluster
Condition:
During the audit of the Authority, it was noted that federal funds were inappropriately loaned to affiliated entities without proper authorization or adherence to federal cash management requirements. Specifically, the entity disbursed $43,533 in federal funds to the Housing Authority of Florence under the guise of a temporary loan, which was not supported by a formal agreement, lacked board approval, and was not repaid within the fiscal year.
Criteria:
According to 2 CFR §200.305(b), non-federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement of those funds. The OMB Compliance Supplement further clarifies that program costs must be paid by non-federal entity funds before submitting a payment request, and that advance payments must be limited to immediate cash needs.
Cause:
The entity lacked adequate internal controls to prevent the unauthorized use of federal funds for non-programmatic purposes. There was no formal cash management policy in place to govern inter-entity transactions or to ensure compliance with federal requirements.
Effect:
The use of federal funds as a loan to an affiliate exposed the entity to potential noncompliance with federal regulations, risked the misappropriation of funds, and may result in questioned costs subject to repayment.
Questioned Costs:
$43,533Recommendation:
We recommend that the entity immediately cease the practice of loaning federal funds to affiliates, implement a formal cash management policy that includes controls over disbursements and inter-entity transactions and rain finance personnel on federal cash management requirements.
Management Response:
Today’s Marlboro County Housing Authority management concurs with the auditor’s finding that federal funds were disbursed to an affiliated entity without proper authorization, documentation, or compliance with federal cash management requirements. The Authority acknowledges that this disbursement represented a lapse in internal controls and was not consistent with the requirements outlined in 2 CFR §200.305(b). During the fiscal year ended September 30, 2024, the Authority also had a payable to the same affiliate in its Public Housing Program totaling $37,658. During the current 2024-2025 fiscal year, the Authority reimbursed its HCV program the amount loaned from its HCV program by the funds owed to the affiliate in its Public Housing Program. Today’s Marlboro County Housing Authority currently has an amount of $2,015 due to its affiliate as of May 31, 2025.