Finding Text
2024 – 014 - Use of Excess Cash Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Public Housing Operating Fund Assistance Listing Number: 14.850 Federal Award Identification Number and Year: FL007, 2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Under 24 CFR § 990.280(b)(5), an asset management fee may be charged to a project only when the project has excess cash flow available after meeting all reasonable operating needs of the property. Additionally, 24 CFR § 990.280(c) provides that central office cost centers may be funded through asset management fees only to the extent those fees are available Condition: During the fiscal year ended June 30, 2024, the Authority charged an asset management fee to AMP 20. Based on the Authority’s year-end excess cash calculation, the AMP had negative excess cash after considering the reasonable operating needs of the property. Therefore, the AMP did not have excess cash available to support payment of the asset management fee. Questioned costs: N/A Context: The Authority was not in compliance with federal requirements related to excess cash and the maintenance of adequate supporting documentation. Cause: The Authority did not have an adequate review process to compare each AMP’s asset management fee against its year-end excess cash calculation before charging or paying the fee to the Central Office Cost Center. Effect: The Authority is not in compliance with federal regulations regarding use of excess cash. Repeat Finding: N/A Recommendation: We recommend that the Authority should also implement a year-end review process requiring management to document that each AMP has sufficient excess cash after meeting all reasonable operating needs before an asset management fee is charged or paid. Any unpaid or accrued asset management fees should also be reviewed and adjusted when the applicable AMP does not have sufficient excess cash. Views of responsible officials: There is no disagreement with the audit finding.