Finding Text
Interfund Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Housing Voucher Cluster and Public Housing Operating Fund Assistance Listing Number: 14.871;14.879 and 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Criteria or specific requirement: The Authority must ensure that all financial transactions, including interfund activity, are recorded accurately, supported by documentation, and compliant with federal financial management requirements. Under 2 CFR section 200.302, the Authority is required to maintain financial management systems that provide for accurate, current, and complete disclosure of financial results for all federally assisted programs. In addition, 2 CFR section 200.303 requires the Authority to implement internal controls to safeguard federal funds and ensure that transactions are properly authorized and recorded. Interfund loans, transfers, and reimbursements must be supported by adequate documentation, consistent with the Authority’s cost allocation plan, and compliant with the cost principles in 2 CFR part 200, subpart E. Costs charged to the Housing Choice Voucher (HCV) Program or Public Housing Program must be allowable, reasonable, necessary, and allocable under 2 CFR section 200.405. Any temporary use of HCV or Public Housing funds for non HCV purposes, or vice versa, must be fully documented and promptly reimbursed to the benefiting program. PHAs must also maintain complete and accurate accounts and records for all program transactions in accordance with 24 CFR section 982.158(a). The PHA must ensure that all interfund transactions are timely reconciled, supported by appropriate documentation, and accurately reflected in the PHA’s financial statements and HUD reporting systems, including the Financial Data Schedule (FDS) submitted under 24 CFR part 5, subpart H. Condition: During the audit, interfund transactions between program funds were identified, which lacked adequate documentation and approval. The Authority could not provide support for the interfund balance transfers and reimbursements between the programs. Questioned costs: $5,660,183 (ALN 14.850); $1,714,685 (ALN 14.871); $82,702 (ALN 14.879); $67,870 (ALN 14.EHV) Context: The Authority is not in compliance with federal regulations regarding transfers of operating funds and maintaining adequate documents per the compliance requirements. Cause: The Authority does not have adequate internal controls designed to ensure that requirements were being met. Effect: The Authority does not have proper controls over the reporting process. Repeat Finding: Yes 2024 – 004 – Interfund Recommendation: We recommend management should create processes to track interfunds and transfers as well as designate an individual to review and approve these transactions. Additionally, the Authority should begin the process of reimbursing the respective programs. Views of responsible officials: There is no disagreement with the audit finding.