Finding 58404 (2022-003)

Material Weakness
Requirement
B
Questioned Costs
$1
Year
2022
Accepted
2022-10-12

AI Summary

  • Core Issue: The Authority improperly charged $26,887.48 to HUD CARES Act funding for software expenses incurred after the allowable date of December 31, 2021.
  • Impacted Requirements: Compliance with HUD Notices PIH-2020-08 and PIH-2020-24, which specify allowable expenses and deadlines for the Housing Choice Voucher program.
  • Recommended Follow-Up: The Authority should consult with HUD to explore options for reallocating allowable expenses or confirm if repayment of the questioned costs is necessary.

Finding Text

Finding 2022-003: Allowable Costs Housing Choice Voucher Material Weakness/Noncompliance Questioned Costs: $26,887.48 Criteria: HUD Notice PIH-2020-08 provided the guidance for the allowable uses of the HUD CARES Act funding for the Housing Choice Voucher program. HUD Notice PIH-2020-24 extended the period of availability to December 31, 2021 which meant expenses for after December 31, 2021 were not allowable items to be charged to this funding. Condition: The Authority utilized its HCV HUD CARES Act funding to pay for its annual software and support that covered the period of July 1, 2021 to June 30, 2022. As a result, one half of this expense was for the period after December 31, 2021 and is not an allowable expense for the HUD CARES Act grant. Cause: The Authority did not consider the impacts of the software contract extending past the December 31, 2021 deadline. Effect or Potential Effect: $26,887.48 of HUD CARES Act expenses are unallowable as they were for expenses past December 31, 2021. An adjustment was recorded during the audit to reflect the $26,8887.48 as a payable back to HUD. Recommendation: The Authority should review this situation with HUD and determine its options. The HCV program had numerous other operating expenses it could have allocated to the grant that would have been allowable. The Authority should request from HUD if it could allocate other expenses from prior to December 31, 2021 to the CARES Act program or determine if the funds must be repaid to HUD. View of the Responsible Officials of the Auditee: The auditee?s management agrees with the finding.

Corrective Action Plan

Finding 2022-002 The Authority agrees with this finding ? As the Authority transitioned housing/accounting software and staff during the year, the procedures for reviewing and approving journal entries was not documented as it had been in the past. Various journal entries were not reviewed and approved by someone other than the preparer. o As of April 1, 2022, all journal entries are reviewed by both the Director of Accounting and Lead Staff Accountant. Part of the previous process included a listing of all journal entries for the month and a sign off sticker that was placed in the monthly journal entry book. We have located a similar report in the current operating system and returned to our previous process of review. Section III ? Federal Awards findings Finding 2022-003 The Authority agrees with this finding. ? The Authority utilized its HCV HUD Cares Act funding to pay for its annual software and support that covered the period of July 1, 2021 to June 30, 2022. As a result, one half of this expense for the period after December 31, 2021 and is not an allowable expense for HUD Cares Act grant. o Effective immediately, specialty funding that has a deadline will not be used on invoices that are considered prepaid. If funding is directly related to an invoice that would be considered a prepaid, and the period of performance extends beyond the funding deadline, a detailed analysis will be completed to ensure proper utilization of finding.

Categories

Questioned Costs Allowable Costs / Cost Principles HUD Housing Programs Material Weakness

Other Findings in this Audit

  • 634846 2022-003
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.871 Section 8 Housing Choice Vouchers $12.91M
14.850 Public and Indian Housing $1.49M
14.872 Public Housing Capital Fund $683,468
10.415 Rural Rental Housing Loans $408,913
14.195 Section 8 Housing Assistance Payments Program $397,992
93.045 Special Programs for the Aging_title Iii, Part C_nutrition Services $129,422
93.052 National Family Caregiver Support, Title Iii, Part E $114,151
93.044 Special Programs for the Aging_title Iii, Part B_grants for Supportive Services and Senior Centers $86,069
14.218 Community Development Block Grants/entitlement Grants $48,965
93.053 Nutrition Services Incentive Program $6,043