Finding 516662 (2024-002)

Assistance Listing Number/Federal Program/Granting Agency: AL# 10.405 Farm Labor Housing Loans and Grants Criteria: Recipients are required to submit the annual proposed budget for the following year 90 days before the start date of the fiscal year. Recipients are also required to submit annual financial reports including Form RD 3560-7 with 12 months of actual income and expenses to RD no later than 90 days following the close of the project fiscal year. Statement of Condition: During our tests of compliance over the RD program, we noted the 2023-2024 RD proposed budgets for Canyon East and Menta Park were not approved by RD since they were not submitted to RD by April 1, 2023 through MINC. The Management was also unable to provide Forms 3560-7 for Canyon East and Menta Park with 12 months of actual income and expenses; therefore, we were unable to verify if the reports were submitted to RD within the required time frame. During our tests of internal control over compliance, we noted the Management did not respond to RD's annual budget reminder in a timely manner. Questioned Costs: None. Cause: The Management stated they submitted the requested 2023-2024 annual budgets, but there were issues with the utility allowances not aligning in the RD software. The Management tried to resolve the issues with RD but eventually the process stopped with no resolution. Effect or Possible Effect and Perspective: The Housing Authority did not comply with the reporting requirement set forth in the RD HB-2-3560 Chapter 4, Section 4 Budget Requirements and Chapter 4, Section 5 Annual Financial Reporting Due Dates and Agency Review of Annual Financial Reports. Repeat Finding: Not a Repeat finding. Recommendation: The Housing Authority should monitor the required RD report submission status, and maintain the documentation of the annual financial reports. Views of Responsible Officials: Agree.