Finding 569372 (2024-003)

Program Name Housing Choice Voucher Internal Control Significant Deficiency A/B Allowable Activities; Allowable costs/Cost principles CFDA Number 14.871 2024-003 FSS Liability and Insufficient Cash Questioned Costs $11,990. Amount restricted cash is short covering FSS liability. Criteria "HUD’s FSS Program Regulations (24 CFR 984.305): Specifically for the FSS program, this regulation governs the management of FSS escrow accounts, which are funded using HAP funds for HCV participants. These escrow funds are restricted to deposits for participants’ savings accounts based on increased rent due to earned income. Using these funds for other purposes, such as covering unrelated HA expenses, is unallowable. " Condition During our audit we noted that the Authority's HCV program did not have sufficient cash to cover the FSS liability Context Per the Authority's FSS escrow liability listing, there should $168,705 in an escrow account. The Authority only has $156,715 in this account, leaving it short by $11,990. The Authority only has $585 in unrestricted HCV causse the program to have insufficient cash to cover the liability Cause Short-term cash shortages, improper use of funds, and lack of controls surrounding the management of restricted cash. Effect As a result, the Program was $11,990 short of the required restricted FSS cash balance to cover the FSS liability. Recommendations The Authority should replenish the HCV program's FSS. cash balance as soon as possible. Management Views Management agrees.