The person who was the Executive Director for the audit year was hired in June 2018. She passed away on May 21, 2023. A person was hired as Interim Director effective June 1, 2023. Through the date of this report, this person is still the Interim Director.
Low Rent Program-CDFA # 14.850, Section Eight Housing Choice Voucher Program-CDFA# 14.871 and Capital Fund-#14.872
Finding 2022-001-Internal Controls Inadequate for Disbursements-Allowable Costs
Criteria and Condition
Good internal controls should be in place to make sure that disbursements are for eligible payments, are correctly classified, and are timely paid. Good controls ensure that there is proper, documented review of all these functions. Records should be maintained in an order that is conducive to efficient and timely summarizing by the outside fee accounting firm. Unaudited financial statements should be produced on a timely basis, and reviewed by the Board of Commissioners.
Context
In our original sample of sixty disbursements, ten of the sixty were not supported by invoices or other adequate documentation. In our expanded tests of disbursements, a total of $88,942 of disbursements were not supported by adequate documentation. However, we note that $63,080 of this total of $88,942 was paid to re-occurring vendors such as for fuel for the maintenance trucks, office supplies, refrigerators and stoves for units, and utilities. However, without the proper documentation, it is impossible to be certain that these were business related expenses. Among the $25,862 of unsupported expenses noted above were $4,809 to the then Executive Director.
In addition, there was a lack of documented, supervisory review of the invoices or statements by a second party before the disbursements were paid. The Authority’s policy is that two signatures are required for checks. However, we noted several that had only one signature, which was that of the then Executive Director.
Accounting information was not sent to the fee accountant for the audit year on a timely basis. According to the fee accountant, March and April 2022 work was not received until September 16, 2022. May and June were not received until October 5th and October 20th. July and August were not received until November 17th and November 23rd. September was not received until December 2. The information was not complete and the unaudited submission to REAC was not made until several months after that.
The defined contribution plan is underpaid by a total of approximately $14,000 for the years ending September 30, 2022, 2020, and 2019 (2021 was correct).
Other disbursements issues noted include the following:
(a)-The General Fund-Low Rent bank account used check vouchers with the same sequence during the year.
(b)-For much of the year, the Section Eight bank account used the same sequence as the General Fund.
(c)-Several Section Eight HAP checks were paid incorrectly from the General Fund, which required time to tally and reimburse the Section Eight fund.
(d)-There were several transfers back and forth between the two funds, which were not always supported and again required time to review.
(e)-Duplicate payments were made to vendors. Current Management has corrected for several of these but continues to review others.
(f)-Late fees were assessed by vendors
(g)-General Fund-Low Rent and Section Eight vouchers were intermixed for much of the year.
(h)-General Fund check vouchers were filed alphabetically instead of numerically for most of the year, which made processing much more difficult for the fee accountant and later the auditor
(i)-Payroll information was not entered into the software for several months.
Effect
Some expenditures were not timely made, or supported, and may have been ineligible. The defined contribution plan is underfunded by approximately $14,000. Accounting information was not timely submitted to the fee accountant, and when it finally was, it was not in good shape. Unaudited financial statements were not timely produced and thus not timely reviewed by the Board of Commissioners.
Cause
These are not new issues. Similar findings have been made in the last few years.
Questioned Costs
$25,862
Recommendation
The Board of Commissioners should periodically review the corrections being made by the Interim Director to address each of the sub-parts noted above in Context. Most efficient PHAs try to have the complete accounting information sent the fee accountant by the 15th of the following month.
View of Responsible Officials and Planned Corrective Action
I am Youlondar Prevost. As noted above, I was hired as Interim Director on June 1, 2023, which was well after the audit year-end. I am trying to correct all of the issues noted above, as well as to correct items noted by HUD-New Orleans. In addition, I am still working to clear parts of the prior audit findings, noted in another section.