Finding Text
Finding 2022-001: Allowable Costs/Cost Principles, Repeat Finding Public Housing Program, Assistance Listing #14.850 Material Weakness/Immaterial Noncompliance, Questioned Costs $4,394 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 does not have the monthly cable fee that is charged to tenants high enough to cover the cost incurred for the service. The amount of costs not recovered was $4,394 for the year ended September 30, 2022. In addition, the Authority has been performing management activities for another project in the community owned by the County. The income has been recorded in the Public Housing Program and is being charged on a per unit fee, however the associated costs to generate the respective income is not being allocated based on the actual costs to generate the income. Therefore, it is not known whether or not the costs exceed the amount of fees collected from the County project. If the costs to generate the income is more, then based on the accounting currently used, it is not known whether or not the Public Housing Program is subsidizing this non-Public Housing activity. Cause ? In regards to the bulk cable questioned costs, this finding was repeated from the prior year. The Authority did not increase the amount charged to tenants during the year ended September 30, 2022. For the second item, the Agency did not consider the costs to manage an outside property could exceed the income generated and does not have the accounting system established in a way to allocate the costs. Effect or Potential Effect - The cost of the cable service does not meet the ?necessary and reasonable? criteria and resulted in questioned costs of $4,394. In addition, there maybe additional questioned costs that cannot be determined because the costs are not being allocated properly. 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. During our audit we noted Authority?s contract for the bulk cable had expired and the Agency did not renew the contract. For the second item regarding the allocation of costs associated with the non-Public Program. The Agency should establish a new program for Management type activities and record this income and the respective costs in this general ledger so the feasibility of the program can be established and better management decisions can be made regarding the continuing of the outside management services. View of Responsible Official: Management agrees with the Finding.