Finding Text
Federal Agency: U.S. Department of Housing and Urban Development: Section 8 Housing Choice Vouchers (ALN 14.87 1) Compliance Requirement: Special Test – Rolling Forward Equity Balances Type of finding: Material Weakness in Internal Control (MW), Instance of Noncompliance (NC) Statement of Condition: In our audit, we did not obtain evidence to validate the initial balances of HAP (Housing Assistance Payments) Equity and Administrative Fee Equity. From the account analysis, we found evidence that the current HAP and Administrative Fee Equity balances are accurate. However, we identified that the initial balances have not yet been subjected to an adequate analysis for a prior-year correction, and proper correction has not yet been implemented. Criteria 24 CFR 982.158 (a) states that the PHA must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must bein the format required by HUD, including requirements governing computerized or electronic forms of record-keeping. Cause of Condition The Municipality's accountants failed to reconcile the prior year's HAP (Housing Assistance Payments) Equity and Administrative Fee Equity balances. Effect of Condition The Municipality did not have proper accounting records to allow them to maintain complete and accurate accounting records and detect errors in a timely manner. Recommendation We recommend that management reconcile the HAP (Housing Assistance Payments) Equity and Administrative Fee Equity balance and thoroughly document the process. Questioned Costs None