Finding Text
2025 -001 – CASH MANAGEMENT Material Weakness/Material Noncompliance U.S. Department of Housing and Urban Development ALN #: 14.872 – Public Housing Capital Fund Criteria For recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through Authority and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. (2 CFR 200.305 (b)) Once funds are disbursed, i.e. transferred from LOCCS to the PHA’s bank account, the PHA must pay the applicable bill(s) within 3 business days after the deposit of the funds into the PHA’s bank account. (HUD Capital Fund Guidebook; Section 7.9) Condition We selected a sample of 5 drawdowns of capital funds from ELOCCs during the year. We identified 1 instance in which the Authority did not process payment to the vendor within 3 business days of receiving the funds. For the year ended December 31, 2025, draw down of capital funds in excess of immediate cash requirements which remained undisbursed resulted in a payable of $956,028. Cause The Authority does not have sufficient procedures in place to coordinate the timing of drawdowns with disbursement schedules. Effect The Authority requested and received federal funds in amounts that exceeded its immediate cash requirements. As a result, federal cash was held for extended periods before being disbursed for program expenditures, which is not consistent with the cash management requirements of 2 CFR 200.305. Questioned Costs Questioned costs - $958,028, representing the Accounts Payable, Other Government. Context The Authority had 13 drawdowns of capital funds during the year. We selected a sample of 5 drawdowns during the year. This was not a statistically valid sample. Repeat Finding Repeated from finding 2024-003. Recommendation We recommend that the Authority utilize the reimbursement method and process payment to the vendor before requisitioning funds from ELOCCs. Auditee’s Response And Planned Corrective Action See Corrective Action Plan.