Finding 1222223 (2025-002)

Material Weakness Repeat Finding
Requirement
Cash Management
Questioned Costs
-
Year
2025
Accepted
2026-06-30
Audit: 406082
Organization: HEARNE HOUSING AUTHORITY (TX)

AI Summary

  • Core Issue: The Authority's drawdowns from federal funding programs were significant, totaling $1,463,314 during the audit period.
  • Impacted Requirements: Approximately 25.4% of total expenditures were linked to these drawdowns, indicating potential compliance concerns.
  • Recommended Follow-Up: Review the drawdown processes to ensure adherence to funding requirements and mitigate risks of non-compliance.

Finding Text

The Authority is a small public housing authority receiving funding under both the Public Housing Capital Fund Program (ALN 14.872) and the Public Housing Operating Fund (ALN 14.850). Total Federal expenditures under these programs during the audit period were $1,463,314 ($1,025,093 under ALN 14.872 and $438,221 under ALN 14.850). The drawdowns identified as part of this finding represent approximately 25.4% of total program expenditures.

Corrective Action Plan

The Authority will adopt a formal written policy requiring at least quarterly review of each open Capital Fund grant, tracking obligation deadlines and percentage obligated by Budget Line Item. Quarterly reports will be presented to the Board of Commissioners. Management will implement written contracting procedures requiring a fully executed contract or purchase order on file before any Capital Fund draw is initiated in eLOCCS. Contracts will be executed no later than 60 days before the obligation end date. Management will conduct an immediate review of all open Capital Fund grants to confirm compliance with obligation and expenditure deadlines and identify any remaining penalty exposure. Results will be reported to the Board. The Authority will adopt a written cash management policy requiring staff to document anticipated disbursements, expected disbursement dates, and a review of current cash balances before each Federal drawdown. Draws will be limited to amounts needed within three business days in accordance with 2 CFR § 200.305(b)(3), regardless of the source of drawdown instructions. I, as the Executive Director will complete documented training on Federal cash management requirements under 2 CFR §§ 200.302 and 200.305. To ensure that the Authority is prepared for the future, the Housing Administrator will also complete documented training on Federal cash management to prepare for current Executive Director’s retirement come May 2027.

Categories

Cash Management HUD Housing Programs

Other Findings in this Audit

  • 1222222 2025-001
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.872 PUBLIC HOUSING CAPITAL FUND $1.03M
14.850 PUBLIC HOUSING OPERATING FUND $438,221