Finding Text
Statement of Condition: As a result of our audit procedures, we noted that High Street Homes, Inc. used
Project funds to pay for unallowable costs.
Criteria: All Project costs must be used only for expenses that are reasonable and necessary for the
operation of the Project as provided for in the HUD agreement.
Cause: There was significant turnover of key personnel in the Finance department during the year, causing
new personnel who were inexperienced with the HUD agreement to have to assume recording of Project
expenses.
Effect: The Project used HUD funding to pay for unallowable costs.
Questioned Costs: $7,010.
Recommendation: The Project should review the HUD agreement and approved budget to obtain a better
understanding of the type of costs that are allowable, and ensure they are only using HUD funds for allowable
costs.
Views of Responsible Officials and Planned Corrective Actions: A formal scheduled training and study
session would benefit staff as there is a need to understand allowable costs. As Senior Management reviews
the disbursements, the final review before check signing, a top level review can also be done. At this point,
the best approach seems there should be formal purchase orders written for the HUD homes - differentiating
High Street Homes from Five Rivers Homes - expenses that should be attached to the invoices before
approval. This additional layer of review will benefit the situation as staff can easily see if an item is approved.