Finding Text
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Public and Indian Housing Assistance Listing Number: 14.850 Federal Award Identification Number and Year: LA003, 2022 Award Period: 10/1/21-9/30/22 Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or Specific Requirement: The Operating Fund was established for the purpose of making assistance available to PHAs for the operation and management of public housing. Transfers out of the Operating Fund can only occur in very limited circumstances, such as when PHAs participate in the Moving to Work Demonstration Program (Assistance Listing 14.881) authorized by 204(c)(1) of Title II of the Omnibus Consolidated Rescissions and Appropriations Act of 1996, Pub. L. No. 104-134, 110 Stat. 1321-282. This would preclude PHAs from using Operating Funds to provide temporary loans to other programs within the PHA. Timing differences in a pooled cash environment would not be considered as temporary loans. Inter-fund transactions indicate the existence of temporary loans. Inter-fund receivables are recorded on FDS line 144 (Inter program ? due from). In particular, inter-fund receivables should be reviewed to determine whether they are satisfied on a timely basis. In addition, FDS lines 10020 (Operating Transfers Out) and 10094 (Transfers Between Programs and Projects ? Out) could indicate whether transfers out of the Operating Fund have been made. If PHAs have transferred funding out of the Operating Fund, proper authorization from HUD should be documented (42 USC 1437g(e)). Condition: During testing, it was noted that the Authority did not properly monitor and reconcile its revolving fund. Questioned Costs: Unknown Context: During our testing over interprogram accounts, it was noted that the COCC has amounts due to public housing under FDS lines 347 and 144 in the amount of $3,787,011. This is a result of the Authority using a revolving fund for expenses. Cause: The Authority failed to properly monitor and reconcile it?s revolving fund between programs. Effect: The Authority is not in compliance with requirements regarding use of operating funds. Recommendation: We recommend the Authority establishes procedures to properly reconcile the revolving fund cash account to ensure that cash and interprogram accounts are properly reported at the program level. Views of Responsible Officials: There is no disagreement with the audit finding.