Finding Text
Finding Reference 2022-005 Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title and ALN: Section 8 Housing Choice Vouchers (ALN 14.871) Compliance Requirement: Accounting Records ? Financial Reporting (L) (MW) Type of finding: Material Weakness in Internal Control (MW), Instance of Noncompliance (NC) Statement of Condition During our audit, we noted that the Program did not maintain an adequate set of accounting records for the Section 8 Housing Choice Vouchers to fairly present the financial position of the program and results of its operations. Criteria 24 CFR Subpart C, Part 85.20 (b) (2) states that the grantees and sub grantees must maintain records which adequately identify the source and application of funds, provided for financially-assisted activities. These records must contain information pertaining to grant or sub grant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. 24 CFR Subpart D Section 982.158 (a) established that the PHA must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a speedy and effective audit. The records must be in the form required by HUD, including requirements governing computerized or electronic forms or record-keeping. The municipality must comply with the financial reporting requirements in 24 CFR part 5, subpart K. The financial management system of other grantees and sub-grantees must meet the following standards: ? Financial reporting: Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or sub-grant. ? Accounting records: Grantees and sub-grantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or sub-grant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. Cause of Condition Adequate internal control and proper monitoring procedures do not exist to ensure the maintenance of complete set of accounting records as required by the Program?s regulations and grant agreement. Also, the accounting personnel does not possess the adequate training to ensure a proper recognition of the Program?s financial transactions. Effect of Condition The Program?s accounting system did not provide updated and complete financial information that present the financial position and the result of operations and the change in fund balances. Such information is necessary to take management decisions. In addition, the Program?s reports related to federal funding may be misleading for internal management decision making and for the reliability of external financial reporting. Recommendation Management should take necessary steps to establish and maintaining proper internal controls and periodic monitoring procedures to ensure the correct recognition of the Program?s financial and budgetary transactions in a complete set of accounting records, using the double-entry system. The Program must give financial training to the personnel in charge of the accounting record-keeping and preparation of the financial reports to ascertain that: (1) the accounting system complies with state and federal laws, (2) all the transactions related to assets, liabilities, revenues and expenditures is recorded and reconciled in a timely manner. Questioned Costs None Prior-Year Finding This finding is similar to prior year finding 2020-008 and 2019-008. View of Responsible Official and Planned Corrective Action Plan The Department of Finance and Budget of the Municipality establish a new monitoring procedure for the preparation and authorization of journal entries to each transaction related to assets, liabilities, revenues and expenditures. Also, the Section 8 Program will give financial training to the personnel in charge of the accounting record-keeping and preparation of the financial reports in order to make sure that the accounting system complies with state and federal laws. Implementation Date March 31, 2024 Responsible Person Mr. Job Bonilla, Federal Program Director