Finding Text
Finding SA2020-003: Operating Subsidy Payments Supporting Documentation
AL number: 14.850
AL Title: Public and Indian Housing
Name of Federal Agency: Department of Housing and Urban Development
Federal Award Identification number and year: CA010 (2020)
Criteria: 24 CFR section 990 requires Public Housing Authorities (PHA) to provide operating subsidies
to public housing projects and document the specific calculation requirements through HUD Form
52723.
Condition: During our audit, we noted that operating subsidy payments totaling $728,553 made to
Easter Hill for Richmond Village I, II, and III during fiscal year 2020 were not supported by HUD Form
52723. As a result, we were unable to determine whether the subsidy amounts were properly calculated
in accordance with the requirements of 24 CFR Part 990.
Cause: Due to staffing shortage, operating subsidy payments were paid in a lump sum without
attaching detailed supporting documents.
Effect: The Housing Authority is not in compliance with the specific calculation requirements of HUD
Form 52723 as specified in 24 CFR section 990.
Questioned Costs: We question the costs in the amount of $728,553 noted above.
Identification as a repeat finding: Yes, since 2019.
Recommendation: The Housing Authority must develop procedures to ensure that all operating
subsidy payments made are supported by HUD Form 52723 and in accordance with 24 CFR section 990.
Management Response: The operating subsidy payments to Easter Hill Development for the properties
Richmond Village I – III are processed based on the property management’s request. The amount paid
can differ from the Form 52723 which reflects the eligible amount for the calendar year ending
December 31, compared to the drawn down and paid amount which is in each fiscal year ending June
30.
The City and the Authority staff require a document/invoice from Easter Hill Development to request
the amount of operating subsidy to be drawn down from eLOCCS and paid via wire transfer as a passthrough
payment, based on their needs and/or eligible amount set forth by HUD.