Finding Text
CFDA No.: 14.850 Agency: U.S. Department of Housing and Urban Development Criteria: Public Housing Authorities (PHA) are required to submit unaudited financial statement information through the REAC system within two months of the PHA’s fiscal year-end (24 CFRR section 5.801). Additionally, a PHA is required to submit its audited financial statements annually within nine months after its year-end (24 CFR section 5.801). Condition: We noted that management of the Authority did not submit its financial information in the REAC system in a timely manner nor did it submit audited financial statements to HUD in a timely manner. Context: During our audit of the Authority, we noted that management submitted its REAC and FDS reporting information after the due date as established by the terms of the grant. Additionally, the audited financial statements were not submitted prior to the due date. Effect: Management and the Board were not in compliance with the requirements of the Uniform Guidance. Cause: Due to a change in management at the Authority and the training that was, and still is, required by management, the FDS submission and the audited financial statements were not filed timely. Management of the Authority tasked with performing the FDS submission and tasked with providing updated, accurate financial information necessary to have an audit performed did not possess the requisite accounting knowledge to properly complete these tasks. Questioned costs: None. Repeat finding: This is a repeat finding. Recommendation: We recommend that management of the Authority review the deadlines for FDS submission and the financial statement submission and work with the newly retained fee accountant to ensure that these deadlines are met in the future. Management’s response: The Authority has had some staff turnover over the past several years. A new executive director and a new account clerk were both hired within the past several years. Management was aware that its submissions were not timely. Management engaged the services of a fee-accountant subsequent to year-end who will assist with these submission going forward. In order to submit and ensure integrity of the unaudited financial statements, the bank accounts reconciliations needed to be completed and account analysis performed. Management will continue to prioritize and remediate outstanding compliance obligations and develop a compliance catch-up plan to ensure timely account reconciliation and account analysis in the future. The fee accountant was not re-engaged to perform bank reconciliations and account analysis for the year ended June 30, 2025 until after June 30, 2025 year end. As a result, management expects this to be a repeat finding in the June 30, 2025 audit.