Finding Text
Use of Emergency Housing Voucher (EHV) Funds for Non-EHV Program Activities (ALN 14.EHV) Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Noncompliance and significant deficiency in internal control over compliance. Condition: During our testing of Emergency Housing Voucher (EHV) program activity, we noted that approximately $90,317 of EHV funds were used for activities outside of the EHV program. Management indicated that the Authority did not obtain a waiver or approval from HUD authorizing the use of EHV funds within the MTW program or for non-EHV activities. Criteria: EHV funds are restricted to activities allowable under the EHV program and are not subject to MTW funding fungibility. While an MTW agency may request HUD approval to apply certain MTW administrative flexibilities to EHV vouchers, such approval must be obtained from HUD before implementation. In the absence of HUD approval, EHV funds must be used solely for authorized EHV purposes. Cause: The Authority did not maintain adequate controls to ensure EHV funds were restricted to allowable EHV program expenditures and to verify that appropriate HUD approval was obtained prior to using EHV funds for activities outside of the EHV program. Effect: As a result, federal funds may have been expended for purposes not authorized under the EHV program, resulting in noncompliance with federal requirements. The Authority may be required to repay improperly expended funds and could be subject to additional HUD review or corrective actions. Questioned Costs: $90,317 Recommendation: The Authority should strengthen controls over federal program expenditures to ensure EHV funds are used solely for allowable EHV activities. In addition, the Authority should establish procedures to obtain and retain documentation of any HUD approvals or waivers before applying MTW flexibilities to EHV vouchers or using EHV funds outside of their intended purpose. Reply and Corrective Action Plan: The Authority concurs with the finding and questioned costs of$90,317. The Authority will strengthen controls over federal program expenditures to ensure EHV funds are used solely for allowable EHV activities; establish procedures to obtain and retain documentation of any HUD approvals or waivers before applying MTW flexibilities to EHV vouchers or using EHV funds outside of their intended purpose; work with HUD to resolve the questioned costs; and provide staff training on EHV program eligibility and allowable-cost requirements.