Finding Text
2025 -002 – PERIOD OF PERFORMANCE Material Weakness/Material Noncompliance U.S. Department of Housing and Urban Development ALN #: 14.872 – Public Housing Capital Fund Criteria Capital Funds identified in the PHA's CFP 5-Year Action Plan to be transferred to operations are obligated by the PHA once the funds have been budgeted and drawn down by the PHA. Capital Funds transferred to operations (BLI 1406) are not considered obligated until the PHA has budgeted and drawn down the funds. To meet this requirement, the funds must be budgeted in line BLI 1406 (Operations) and the PHA must submit the voucher request in LOCCS. (24 CFR Section 905.314(I)). Condition The Authority had obligated capital funds related to operations (BLI 1406) for Capital Fund years 2020, 2022, and 2023 prior to the voucher request date for these draws. Cause Funds were drawn down before the Authority submitted voucher requests. Effect The Authority had obligated funds for operations prior to the voucher request date of these draws. This inhibits HUD’s review of outstanding obligations and expenditures for the Capital Fund Program. Questioned Costs Possible questioned costs - $958,028, representing the Accounts Payable, Other Government. Context The Authority had five open capital fund grants during fiscal year 2025 (Capital Fund years 2020-2025). The Authority obligated funding for 2020, 2022, and 2023 Capital Funds before submitting voucher requests. Repeat Finding Repeated from Finding 2024-005. Recommendation We recommend the Authority strengthen its grant management procedures by implementing a tracking system for grant deadlines and obligation dates. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.