Finding Text
Criteria – The Agency is required to follow OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards contained in 2CFR Chapter I and Chapter II. One of the general criteria contained in §200.403, costs must be “necessary and reasonable for the performance of the Federal Award and be allocable thereto under these principles”.
Condition – The Agency has a contract to purchase bulk cable services and is required to pass these costs to the tenants who are the users of the service. During our audit we noted the Agency did not have the fees charged to the tenants high enough to cover the cost incurred for the service. The amount of costs not recovered was $4,503 for the year ended September 30, 2024.
Cause – This finding was repeated from the prior year. The Agency did not increase the amount charged to tenants during the year ended September 30, 2024.
Effect or Potential Effect - The cost of the cable service does not meet the “necessary and reasonable” criteria and resulted in questioned costs of $4,503. Subsequent the fiscal year end, the Agency has increased the fees charged.
Recommendation - We recommend in the future that the Agency consider the basic criteria of being “necessary and reasonable” before incurring costs in a Federal Award program. The costs of the cable services need to be paid fully by the tenants and should be monitored by management to ensure the Public Housing Program does not incur any of these costs.
View of Responsible Official: Management agrees with the Finding.