Finding Text
2022-004 ? SPECIAL TESTS AND PROVISIONS ? CARES ACT FUNDING Material Weakness/Material Noncompliance U.S. Department of Housing and Urban Development CFDA #: 14.871 / 14.879 ? Housing Voucher Cluster CRITERIA ? The additional funds transferred to the COCC must be for immediate use and cannot be rolled into the PHA?s COCC reserves. This means, any additional fees above the safe harbor amounts transferred must be attached to a specific COCC expense and immediately used (i.e., used to pay the associated liability). ? The PHA is required to track and account for these additional COCC funds separately. This means that a PHA?s COCC records must show the amount, when these additional funds were transferred to the COCC, the actual expenses that the additional COCC funds were used to cover, and the date paid. ? Supplemental administrative fees used for capital activity will be reported as an equity transfer out of 14.HCC or 14.MSC to the respective HCV (CFDA #14.871) or Mainstream (CFDA #14.879) program. The HCV and Mainstream Voucher program will show the receipt of the capital assets as an equity transfer in (FDS line items 11040- 070 through 11040-110). Once the asset is placed into service, the PHA should transfer the asset to the program and report any associated depreciation expense in the program and not in 14.HCC and/or 14.MSC. (PIH Notice 2020-24) CONDITION The following conditions were found as part of the FY 2022 audit: ? The Authority?s system for tracking the expenditure of CARES Act related funds did not provide for sufficient detail in order to be able to clearly identify the program source of fund (PIH, HCV or Mainstream) and the use of funds. ? From the documentation reviewed, it is unclear what expenses the additional management fee of $296,949 was used for. In addition, $258,754 was reported as unearned revenue at June 30, 2021. ? Prior to audit adjustments, the Authority had incorrectly expensed $919,074 of CARES funding used for capital improvements. CAUSE The Authority did not establish adequate internal controls over compliance relating to CARES Act funding. EFFECT Funding provided through the CARES Act may have been used for ineligible expenditures. QUESTIONED COSTS None Identified. CONTEXT The Authority received $1,616,413 in CARES Act funding under the PIH, HCV, and Mainstream Programs. REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend that the Authority address this matter directly with HUD. AUDITEE?S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.