Finding Text
Finding 2025-007: Financial Condition - Section 8 Housing Choice Voucher Program, Federal Assistance Listing #14.871, this is repeated from Finding 2025-003 in Section II, Financial Statement Findings Material Weakness Criteria: The Section 8 Housing Choice Voucher Program is a federal program in which the administrative expenses reimbursed are limited to a calculation which consists of the total number of units leased and an allowable administrative fee rate established by the federal government. Therefore, there is a limit as to the amount of administrative fees the Authority can receive. Consequently, it is important that the Authority monitor the actual administrative expenses incurred and the amount of administrative fee received. Condition: During the fiscal year ended June 30, 2025, the Authority’s administrative expenses exceeded the fee earned as follows: Administrative fee earned $ 84,699 Administrative expenses (115,484) Unreimbursed administrative expenses $ (30,785) In the previous year the administrative fees earned exceeded administrative expenses by $10,841. At the beginning of the year in July 2024, the Authority had 102 vouchers leased and started to decrease in 2025 and ended the year at 85 vouchers. Subsequently, we noted by December 2025 the number of leased vouchers had decreased to 73. At the beginning of the fiscal year July 2024, the beginning administrative net position was $45,135 and due to the loss as noted above, the ending administrative net position as of June 30, 2025 was $15,646. If the losses continue the Authority will need to supplement this program with non-federal sources. In addition, the HAP net position was $23,093 as of June 30, 2025 but it is against HUD regulations to use any of these funds for administration as it is restricted specifically for HAP payments. Cause: The cause of this condition is the expenses exceeding the income sources of the administrative fees earned. Effect or Potential Effect: The effect of this condition could result in future questioned costs and the future inability for the Authority to remain a viable entity. Recommendation: We recommend the Authority review the various program costs related to each respective federal program and to cut expenses where considered necessary. The analysis of the various expenses should be considered carefully in order to maintain the operating efficiency and effectiveness of the federal programs View of Responsible Official: Management agrees with the Finding.