Finding 577102 (2022-004)

-
Requirement
AB
Questioned Costs
$1
Year
2022
Accepted
2023-10-25
Audit: 1234
Organization: Indianapolis Housing Agency (IN)
Auditor: Somerset CPAS

AI Summary

  • Core Issue: The Agency improperly used $700,000 from HCVP administrative reserves for non-HCVP payroll expenses, violating HUD regulations.
  • Impacted Requirements: This action breaches 24 CFR 982.155, which restricts HCVP reserves solely for program administrative expenses.
  • Recommended Follow-Up: Implement stronger financial controls and oversight as outlined in finding 2022-001 to prevent future misuse of restricted funds.

Finding Text

Criteria: 24 CFR 982.155 indicates Housing Choice Voucher Program (HCVP) administrative reserves must be used to pay program administrative expenses. HUD has indicated in PIH Notice 2005-01 HCVP administrative reserves are restricted solely for the HCVP and no other Agency administrative expenses. Condition and Context: The Agency used HCVP administrative reserves to cover Agency payroll expenses during 2022 and through the date the financial statements were available to be issued. The Agency also made errors in initially recording restricted funds received in the general ledger which resulted in journal entries and bank transfers necessary to appropriately record amounts received. The specific HCVP administrative reserves used to cover non-HCVP Agency payroll expenses were advanced as noted below. • $500,00 advanced on January 21, 2022. Amount not repaid as of the date the financial statements were available to be issued. • $200,000 advanced on March 10, 2022. Amount not repaid as of the date the financial statements were available to be issued. Cause and Effect: The predominate reason for the finding is due to cash flow concerns specific to payment of payroll and lack of controls surrounding transfer of funds from restricted accounts. This finding resulted in noncompliance with allowable use of HAP. Known Questioned Costs: $700,000 of HCV administrative reserves used to non-HCVP cover payroll expenses during 2022. Recommendation: See finding 2022-001. The recommendations noted for achieving appropriate oversight in the finance department apply as key individuals with knowledge of the compliance are considered critical for developing an appropriate control environment for internal controls over compliance. Views of Responsible Officials and Planned Corrective Actions: The Agency agrees with the recommendation. See the Corrective Action Plan for the Agency’s response and planned completion date.

Categories

Questioned Costs Internal Control / Segregation of Duties HUD Housing Programs

Other Findings in this Audit

  • 659 2022-003
    Material Weakness Repeat
  • 660 2022-004
    -
  • 661 2022-005
    Material Weakness Repeat
  • 662 2022-006
    - Repeat
  • 663 2022-007
    -
  • 664 2022-008
    - Repeat
  • 665 2022-009
    -
  • 666 2022-010
    -
  • 667 2022-003
    Material Weakness Repeat
  • 668 2022-004
    -
  • 669 2022-005
    Material Weakness Repeat
  • 670 2022-006
    - Repeat
  • 671 2022-007
    -
  • 672 2022-008
    - Repeat
  • 577101 2022-003
    Material Weakness Repeat
  • 577103 2022-005
    Material Weakness Repeat
  • 577104 2022-006
    - Repeat
  • 577105 2022-007
    -
  • 577106 2022-008
    - Repeat
  • 577107 2022-009
    -
  • 577108 2022-010
    -
  • 577109 2022-003
    Material Weakness Repeat
  • 577110 2022-004
    -
  • 577111 2022-005
    Material Weakness Repeat
  • 577112 2022-006
    - Repeat
  • 577113 2022-007
    -
  • 577114 2022-008
    - Repeat

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $60.27M
14.872 Public Housing Capital Fund $2.27M
14.850 Public and Indian Housing $1.73M
14.879 Mainstream Vouchers $529,342
14.231 Emergency Solutions Grant Program $196,547
14.896 Family Self-Sufficiency Program $133,418