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 (2021) 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 $582,050 were made to Easter Hill for Richmond Village I, II, and III during fiscal year 2021. While RHA provided the calendar year 2021 Form 52723, no Form 52723 for calendar year 2020 were available. As a result, we were unable to reconcile the subsidy payments and determine whether the subsidy amounts were properly calculated in accordance with the requirements of 24 CFR Part 990. Cause: We understand that the staff overseeing the federal awards during fiscal year 2021 are no longer with the Authority, and therefore, the staff overseeing the federal awards subsequent to the fiscal year were unable to provide supporting and documentation was not properly maintained, resulting in missing records to support certain expenditures. Effect: We were unable to determine whether the Housing Authority is in compliance with the calculation requirements of HUD Form 52723, as outlined in 24 CFR Section 990. Questioned Costs: We question the costs in the amount of $582,050 noted above. Identification as a repeat finding: Yes, since 2019. Recommendation: The Housing Authority should establish a procedure to appropriately reconcile the Form 52723 and subsidy payments ensuring that proper documentation is maintained and readily accessible for future audits. Management Response: The Authority agrees with the recommendation. The Authority will ensure that all operating subsidy requests are fully supported by the correct HUD Form 52723 documentation. Staff will develop a reconciliation process to confirm that subsidy payments align with HUD‑required calculations and that both current‑year and prior‑year forms are maintained for audit. The Authority will coordinate with property management partners to ensure supporting documentation is provided before subsidy drawdowns occur, and all records will be stored in accordance with HUD retention requirements.