Finding 384544 (2023-004)

Significant Deficiency Repeat Finding

Requirement

Questioned Costs

Year

2023

Accepted

2024-03-26

Audit: 297648

Organization: Housing Authority of the City of Waterbury (CT)

Auditor: Marcum LLP

AI Summary

Core Issue: The Authority used Capital Funds for operating costs before the required voucher request date, violating HUD regulations.
Impacted Requirements: Compliance with the CFP 5-Year Action Plan and 24 CFR part 990 regarding fund transfers.
Recommended Follow-Up: Ensure funds are only obligated after a signed contract or agreement, as per the corrective action plan initiated in April 2023.

Finding Text

2023-004 – SPECIAL TESTS AND PROVISIONS – CAPITAL FUNDS FOR OPERATING COSTS Significant Deficiency / Other Matter U.S. Department of Housing and Urban Development CFDA #: 14.872 – Public Housing Capital Fund CRITERIA A PHA may use Capital Funds for operating costs only if it is included in the CFP 5-Year Action Plan that is approved by the PHA Board of Commissioners and HUD, and limited as described in paragraphs (l)(1) and (2) of this section. Capital Funds identified in the CFP 5-Year Action Plan to be transferred to operations are obligated once the funds have been budgeted and drawn down by the PHA. Once such transfer of funds occurs, the PHA must follow the requirements of 24 CFR part 990 with respect to those funds. CONDITION The Authority had obligated capital funds related to operations (BLI 1406) prior to voucher request date for these draws. CAUSE Prior to March 2023, management was unaware of this requirement. EFFECT The Authority had obligated funds for operations prior to the voucher request date of these draws. QUESTIONED COSTS None Identified. CONTEXT The Authority had five open capital fund grants during fiscal year 2023 (Capital Fund formula grants 2020-2023 and an Emergency Capital grant). The Authority drew down funds for operating costs under capital fund year 2022. Total capital fund draws for operating costs under this grant during 2023 aggregated $592,497. REPEAT FINDING This finding is repeated from 2022-007. RECOMMENDATION The Authority should continue with their corrective action plan implemented in April 2023, in which funds are only obligated after which the Authority has a signed contract or agreement in place. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.

Corrective Action Plan

Historically, the Housing Authority obligated funds as they became available on a monthly basis, based on the five-year plan approved by HUD. The Housing Authority was not aware that drawdowns of Capital funds for operating, and construction costs have to be obligated when the expense is incurred, or a contract entered into. This was corrected as of February 2024; however, CFP 2023 had already been fully obligated. The Housing Authority will implement this new procedure with the issuance of the 2024 CFP grant. The Housing Authority has put a process in place to make sure the operating funds are obligated in LOCCs only after a contract is executed and expenses have been incurred as part of our monthly procedures. The Comptroller, Jennifer Yager, will oversee this under the guidance of the CFO Consultant and the Capital Project Manager. This will be implemented with the issuance of CFP 24. Jennifer can be reached at 203-596-2640.

Other Findings in this Audit

384541 2023-002

Significant Deficiency
384542 2023-003

Significant Deficiency Repeat
384543 2023-003

Significant Deficiency Repeat
960983 2023-002

Significant Deficiency
960984 2023-003

Significant Deficiency Repeat
960985 2023-003

Significant Deficiency Repeat
960986 2023-004

Significant Deficiency Repeat

Programs in Audit

ALN	Program Name	Expenditures
14.871	Section 8 Housing Choice Vouchers	$22.42M
14.850	Public and Indian Housing	$5.49M
14.872	Public Housing Capital Fund	$2.97M
14.856	Lower Income Housing Assistance Program_section 8 Moderate Rehabilitation	$1.45M
14.879	Mainstream Vouchers	$967,884
14.249	Section 8 Moderate Rehabilitation Single Room Occupancy	$40,809