Finding Text
Finding 2022-001 ? Capital Fund Program Accounting ? Noncompliance & Material Weakness ? Cash Management & Program Compliance ? CFDA # 14.872 ? Grant years 2018, 2019 Criteria: Appropriate cash management policies and procedures should facilitate the timely request and reimbursement of allowable HUD grant expenses. Per the Capital Fund Guidebook, ?once funds are disbursed, i.e. transferred from LOCCS to the PHA?s bank account, the PHA must pay the applicable bill(s) within 3 business days after the deposit of the funds into the PHA?s bank account. PHAs cannot expend nonfederal funds first to pay the applicable bills and then use Capital Funds to reimburse themselves.? Condition: Upon review of the year-end financial statements and capital fund accounting and reporting we have determined that a deficiency in funding at June 30, 2022 for CFP 501-18 and 501-19 in the amount of $386,903.44. This means that the PHA incurred costs in excess of funds drawn down from the eLoccs HUD system. The PHA is not properly managing cash flow in regards to the expenditures of CFP costs and subsequent requisition of funding from HUD via eLoccs. There should be a system in place which provides for the immediate expensing and then requisitioning of funds from HUD. Cause & Effect: Failure to request reimbursements for incurred grant costs in a timely fashion led to a year-end accounts receivable balance in the Capital Fund program of $386,903.44, which required using funds from other sources to cover the capital fund program costs. Recommendation: We recommend that the PHA establish an appropriate cash management procedure that facilitates timely requests and reimbursements of grant costs as incurred.