Finding Text
Finding 2022-004 ? Information on the federal program: CFDA 14.850; U.S Department of Housing and Urban Development; Public and Indian Housing; annual contributions contract number FW-7097; fiscal year ending March 31, 2022. ? Criteria or specific requirement (including statutory, regulatory, or other citation): Allowable costs/cost principals in accordance with 24 CFR 200, the PHA Annual Contributions Contract, and PHA Internal Control Policy. ? Condition: The audit identified exceptions in expenditures relating to allowability, in that certain disbursements were not executed in accordance with PHA operating controls, including the internal control policy, annual contributions contract, procurement policy, and operating budget. ? Questioned costs: My sample of 70 disbursements contained 3 exceptions identified as unallowable costs associated with payments for items questioned as necessary costs in providing for government subsidized housing operations. I noted $515 of sales taxes paid, $75 in unsubstantiated items, and $6,084 in questionable items purchased using online platforms with a credit card not authorized by the internal control policy, delivered to a personal residence. I also noted budgetary overruns in controlled accounts not identified by the PHA (see Note 2 to the financial statements). ? Context: The audit identified 3 sample exceptions from my sample of 70 disbursements reviewed. ? Effect: The errors noted were due to a lack of controls over the purchasing process. The projected misstatement of $27,311 is considered to be a significant deficiency. ? Cause: Weakness in internal controls over purchasing relating to proper authorization, documentation, program compliance and budgetary procedures. ? Identification as a repeat finding: This is not a repeat audit finding. ? Recommendation for Corrective Action: Establish and enforce controls over Board of Commissioners and Managements review and supervision of purchasing procedures. Specific internal control and budgetary procedures should be implemented to ensure all costs are reasonable and necessary for the economical operation of the project for the purpose of serving families of low-income status in accordance with 24 CFR section 200. ? Views of Responsible Officials and Planned Corrective Actions: We will review existing policies, implementing control procedures to correct these deficiencies. We will also provide increased supervision and training over this area. We anticipate a complete resolution of this type of error by December 31, 2022.