Finding Text
Section 8 Housing Choice Voucher Program-CDFA#14.871, Low Rent Program-CDFA#14.850
2023-004-Significantly large interfund account needs to be reduced-Allowable Costs/Principles
Criteria and specific requirement
In small and medium-sized PHAs, there is a required allocation of expenses between programs. It is often not practical to maintain separate bank accounts and pay each program’s expenses out of its individual bank account.
As a result, usually there are interfund payables and receivables between the accounts/programs. Ideally, the interfund amounts should be kept to a minimal amount, if not paid in full at the start of every month.
The danger is that the larger the interfund amount is and/or grows, the more difficult it may be to pay off the interfund payable amount. The practical effect is if this happens, one fund is paying the expenses of another fund on a permanent basis. This results in a “transfer” between the Housing Choice Voucher and Low Rent programs, which federal regulations do not allow.Condition Found
At September 30, 2023, the Low Rent Program owes the Housing Choice Voucher Program $71,428.
Context
The significant interfund balance has existed for several years. We note that it was substantially reduced in the audit year, from $165,833 to $71,428.
Cause
Apparent oversight.
Effect
The possibility exists that the fund that owes the funds might be unable to repay the balance.
Recommendation to prevent future occurrences
The interfund balance should be paid off as soon as possible.
View or Responsible Official
We will comply with the auditor’s recommendation. I do note that we were short of personnel for the entire audit period. I believe that I have staff presently that can do most of the assigned duties. I admit that not all of the deficiencies noted were due to being understaffed, but lack of training (being new to HUD) and understanding. But we will also correct those errors to the best of our ability.