FAC Explorer

Finding 393788 (2021-005)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2021
Accepted
2024-04-19
Audit: 303983
Organization: Housing Authority of the City of Pueblo (CO)
Auditor: Eide Bailly

AI Summary

  • Core Issue: There is a material weakness in internal controls over budgeting and accounting for project-based expenses.
  • Impacted Requirements: PHAs must develop a system for accurate revenue and expense analysis per project, as outlined in 24 CFR section 990.280(a).
  • Recommended Follow-Up: Implement regular reviews of allocation methods and establish a control process to ensure accuracy and reasonableness in expense allocations.

Finding Text

U.S. Department of Housing and Urban Development ‐ CFDA #14.850 Public and Indian Housing Applicable Federal Award Number and Year – Public and Indian Housing ‐ 2021 Special Tests and Provisions: Project‐Based Budgeting and Accounting Material Weakness in Internal Control over Compliance Criteria – PHAs who have implemented asset management are to develop and maintain a system of budgeting and accounting for each project in a manner that allows for analysis of actual revenues and expenses associated with each property (24 CFR section 990.280(a)). Condition – During our testing, we identified several errors in how expenses were being charged and or allocated to the projects. In addition, there was insufficient documentation supporting how allocation methods were determined and there was no review of the allocation calculations by another individual. Questioned Costs – None Reported. Context/Sampling – A non‐statistical sample of 60 expenditures were selected for testing. 12 out of the 60 expenditures utilized an allocation method that was incorrect or lacked sufficient documentation on how the allocation method was determined. Effect – Failure to implement and maintain a proper control process could result in the misallocation of costs to a project or the program. Cause – The Authority has experienced significant staff turnover and the Authority’s controls are currently not adequately designed and operating. Repeat Finding from Prior Year – Yes. Recommendation – The Authority should ensure that all allocation methods are reviewed and adjusted regularly for changes within the program. Additionally, a control process should be implemented to review the application of allocation methods and their reasonableness. Views of Responsible Officials – Management agrees with the finding.

Corrective Action Plan

U.S. Department of Housing and Urban Development – CFDA #14.850 Public and Indian Housing – 2021 Special Tests and Provisions: Project-Based Budgeting and Accounting Material Weakness in Internal Control over Compliance Finding Summary: During testing, we identified several errors in how expenses were being charged and or allocated to the projects. In addition, there was insufficient documentation supporting how allocation methods were determined and there were no reviews of the allocation calculations by another individual. Responsible Individual: Steven Trujillo, Executive Director Corrective Action Plan: We agree that in 2021 expenses were not consistently allocated to our Public Housing Projects. However, we have now implemented consistent allocation methods so that expenses charged to our Public Housing projects will be reasonable and proper. We also review those allocation methods an a regular basis and change them as necessary. Anticipated Completion Date: January 2023

Categories

Special Tests & Provisions Allowable Costs / Cost Principles HUD Housing Programs Material Weakness Internal Control / Segregation of Duties

Other Findings in this Audit

  • 393781 2021-003
    Material Weakness Repeat
  • 393782 2021-003
    Material Weakness Repeat
  • 393783 2021-011
    Significant Deficiency
  • 393784 2021-012
    Significant Deficiency
  • 393785 2021-011
    Significant Deficiency
  • 393786 2021-012
    Significant Deficiency
  • 393787 2021-004
    Material Weakness Repeat
  • 393789 2021-006
    Significant Deficiency Repeat
  • 393790 2021-004
    Material Weakness Repeat
  • 393791 2021-005
    Material Weakness Repeat
  • 393792 2021-006
    Significant Deficiency Repeat
  • 393793 2021-007
    Material Weakness Repeat
  • 393794 2021-008
    Significant Deficiency Repeat
  • 393795 2021-009
    Significant Deficiency Repeat
  • 393796 2021-010
    Significant Deficiency
  • 970223 2021-003
    Material Weakness Repeat
  • 970224 2021-003
    Material Weakness Repeat
  • 970225 2021-011
    Significant Deficiency
  • 970226 2021-012
    Significant Deficiency
  • 970227 2021-011
    Significant Deficiency
  • 970228 2021-012
    Significant Deficiency
  • 970229 2021-004
    Material Weakness Repeat
  • 970230 2021-005
    Material Weakness Repeat
  • 970231 2021-006
    Significant Deficiency Repeat
  • 970232 2021-004
    Material Weakness Repeat
  • 970233 2021-005
    Material Weakness Repeat
  • 970234 2021-006
    Significant Deficiency Repeat
  • 970235 2021-007
    Material Weakness Repeat
  • 970236 2021-008
    Significant Deficiency Repeat
  • 970237 2021-009
    Significant Deficiency Repeat
  • 970238 2021-010
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.872 Public Housing Capital Fund $1.24M
14.182 Section 8 New Construction and Substantial Rehabilitation $553,367
14.871 Section 8 Housing Choice Vouchers $312,375
14.850 Public and Indian Housing $279,167
14.856 Lower Income Housing Assistance Program_section 8 Moderate Rehabilitation $178,865
10.405 Farm Labor Housing Loans and Grants $127,040
10.427 Rural Rental Assistance Payments $60,863
14.896 Family Self-Sufficiency Program $36,603