Corrective Action: deferred Capital Fund Program (CFP) revenue balance of $15,076 resulted from IHA inadvertently drawing funds from the incorrect CFP grant to pay an eligible expense. When the error was discovered, IHA drew the funds from the correct CFP grant and applied an eligible expense to the CFP grant that had previously been drawn down, net zeroing the error. To ensure CFP funds are drawn only to cover valid expenses and no more than three (3) days in advance of disbursement, as required by the HUD Capital Fund Guidebook (2016) and 2 CFR 200.305(b), IHA has implemented the following internal control procedures over CFP cash management: 1. Draw Timing. CFP funds will be drawn in eLOCCS only after an invoice has been received, approved, and scheduled for payment, or after payment has been issued. No draw will be requested more than three (3) days before the related disbursement, and the amount drawn will not exceed the approved invoice amount. 2. Grant Verification Before Each Draw. Each eLOCCS draw will be supported by a CFP Draw Request worksheet identifying the vendor, invoice number, amount, CFP grant number, and Budget Line Item (BLI). Before submission, the grant number and BLI will be verified against the approved Annual Statement/Performance and Evaluation Report (form HUD-50075.1) and the invoice to confirm the expense is charged to the correct grant year. 3. Segregation of Duties. The staff member who prepares the draw request will not be the same individual who approves the draw in eLOCCS. The CEO will review and approve each draw request and its supporting documentation before the draw is submitted. 4. Monthly Reconciliation. Each month, eLOCCS draws will be reconciled by grant number to CFP deferred CFP revenue account will be reviewed monthly, and any CFP funds that remain undisbursed more than three (3) days after a draw will be investigated and resolved. 5. Year-End Review. Before fiscal year-end close, the CEO and fee accountant will review the deferred CFP revenue account to confirm that all CFP funds drawn have been expended on eligible costs for the correct grant. 26 6. Correction of Future Draw Errors. Going forward, if a draw from the incorrect grant or a draw in excess of an eligible expense is discovered, IHA will not offset the error between grants. IHA will return the funds to HUD and then draw the correct amount from the correct grant, following HU Repayments greater than $2,000 will be remitted by wire transfer to the U.S. Treasury (FRB New York) for the U.S. Department of HUD (Ft. Worth, TX), with the complete grant number (PPN) entered in the third-party memorandum field. Department of HUD and mailed to US Bank, HUD-FAD Collections Ft. Worth, with the required cover letter. On the day of the wire transfer, IHA will email the HUD Office of the Chief Financial Officer (FWAC-AccountsReceivableDocuments@hud.gov), the PIH Field Office, and the PIH Office of Capital Improvements (PIHOCI@hud.gov), copying the designated OCFO contacts, using Backup documentation will include a copy of the wire transfer or check and a cover letter that identifies the reason for repayment, the source year of the federal appropriation, and the grant number (PPN). Once HUD has credited the returned funds, IHA will draw the eligible expense from the correct CFP grant, and the repayment and redraw documentation will be retained in the grant file. 7. Written Procedures and Training. cash management procedures, and all staff involved in CFP draws will be trained on them. Compliance will be monitored through the monthly reconciliation described above. Responsible Person: Tina Bartlett, CEO Implementation Date: Effective immediately If you have any further questions, please let me know. Contact Person: Tina Bartlett, CEO 4215 S. Hocker Dr., Bldg. 5 Independence, MO 64055 816-994-0204 4215