Finding Text
Capital Fund-CDFA#14.872 and Low Rent Program-CDFA#14.850
Finding 2024-001-Support for Disbursements Lacking – Allowable Costs
Criteria and Condition
Expenses must be supported by adequate documentation which supports that the expense was necessary and properly classified, and the individual(s) that utilized the expenditure (example-who used the airline ticket, the explanation of the purpose of the travel, the seminar registration, etc. Another example-food was purchased by which individual, the business justification for the meal purchased).
Context
We reviewed the adequate documentation of disbursements on a test basis. We noted the following:
(a)-We noted $47,106 of expenses that in our opinion are not adequately supported. Total credit card payments were $71,736. We reviewed $20,939 of the $71,736. 72% were not supported. Interpolating the 72% to the total, we calculate that approximately $20,086 of credit card payments were not supported. This $20,086 is part of the noted $47,106.
(b)We noted an additional $6,770 that was expended for what appears are personal items. If purchased for the authority, we deem these expenses as unnecessary and excessive.
(c)-The authority contracted and paid monthly payments on 36-month payment agreements for cell phones for each employee, plus two tablets management claims were used by the participants in the tenant services program ($525 was also paid for walkie talkies and a CB radio). Management claims that each employee also has a personal cell phone and that the employees understand that the business cell phones should not be used for business.
(d)-$12,951 of rental car expenses were paid to one rental car company. Of this total, $3,275 was unsupported and included in the $47,106 noted in (a).
(e)-$50,000 was budgeted for Tenant Participation Activities. $86,366 was charged to this account. Management represents that an indeterminate part of the food separate from tenant services and employee benefits and snacks charged to this account was for the board of commissioners, although most were for children and their counselors in after school activities. State law prohibits food and drinks purchased for the board, except for exacting circumstances, of which these do not appear to qualify.
Cause
Based on prior audits and conversations with management, the latter understands the federal regulations for expenditures. We do not know the cause. Effect
It appears that federal regulations were not complied with.
Recommendation
(a) Vouchers should not be prepared for payment unless a clerk reviews the support and determines the support is adequate. This should be done even if the E.D. presents an amount for payment. The clerk should check 100% of the detail of credit card payments for support.
The clerk’s review should be noted on the voucher, such as signature or initials and date. If the clerk initially prepares the voucher, the E.D. should note that she reviewed the detail.
In addition, the authorized co-signer should not sign payments unless the support for the payment is reviewed and determined to be adequate. Again, this includes all of the detail for credit card payments.
(b) If any purchases are made that appear to be personal, such as purses, the specific business purpose needs to be noted.
(c) A cell phone policy needs to be adopted. One can be obtained from a neighboring authority. The E.D. should review the calls each month on each employee cell phone. Unless the business purpose of the call is clear, the calls should be considered personal. A calculation of the personal versus business calls should be made. Employees should reimburse the authority promptly for the personal percentage, or the amount withheld from salary checks.
(d) Rental car charges need to be detailed for business purpose.
(e) Expenses for Tenant Participation Activities should not exceed the budgeted amount.
View of Responsible Official
We will follow the auditor’s recommendation.