Finding Text
2023-007 Allowability - Interprograms Housing Voucher Cluster Material Weakness in Internal Control Material Noncompliance (Repeated in part from prior year, Finding No. 2022-001) Condition: Currently the Authority maintains a material interprogram receivable in Housing Choice Voucher program (“HCV”), which is due from the Central Office Cost Center (“COCC”). As of December 31, 2023, the interprogram receivable for HCV is $2,500,000. Criteria: Per HUD regulations, 2 CFR part 200, and the line definition guide issued by HUD for the Financial Data Schedule, funds in HCV can only be transferred to other related Housing Assistance Payment based programs or to the COCC for a fee for service or other pre-approved HUD exceptions. The Authority is cautioned that funds are normally not fungible between different federal programs regardless of the nature of the transfer or receivable. Inappropriate use of funds, even a temporary loan, are considered ineligible costs resulting in non-compliance. HCV, under current laws, should not loan the COCC any funds. Context: During the audit review of reconciling cash, it was observed that COCC had been transferred these funds in prior years. Cause: The Authority lacked internal controls to prevent the misuse of federal funds to cover operating losses in the COCC. Effect: The Authority is not in compliance with HUD requirements regarding eligible use of federal funds. Questioned Costs: $2,500,000 Auditor Recommendations: The Authority should follow the Recovery Plan, once established, that will be implemented with HUD to pay back the interprogram receivable. The Authority should continue to budget and monitor COCC and other Authority expenses to eliminate the need for borrowing funds from restricted federal programs, and to have the ability to reimburse HCV for the borrowed funds. Management Response: See Corrective Action Plan.