Finding Text
2022-011) Program Income Questioned Costs: Undetermined Department of Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-16-MC-22-0204, M-17-MC-22-0204, M-18-MC-22-0204, M-19-MC-22-0204, M-20-MC-22-0204, M-21-MC-22-0204, M-22-MC-22-0204 Criteria: Program income includes payments received from principal and interest on loans made with HOME funds. Such program income should be accounted for, serviced for collection (if not forgiven), and recycled back into the HOME program. The City-Parish utilizes an outsourced loan servicing company to assist with the accounting, tracking and collection of program income. Condition: One of the City-Parish?s primary HOME activities is the lending of funds for development of low-moderate income housing, single family home purchases and other purposes. These ?soft secondary? loans are to be repaid in varying amounts and points-in time, depending on the development?s viability or borrowers? ability to repay The City-Parish?s loan accounting process does not effectively demonstrate and ensure that all loan payments due and those collected were accounted for as program income. Universe/ Population: The City-Parish?s outsourced loan servicing company?s reports at year-end were compared to the program income in general ledger accounting records for the year. The reduction in the loan balances from 2021 to 2022 was $1,509,024 while program income was $823,325, leaving an unaccounted-for difference of $685,699. It is acknowledged that some of the difference could be attributable to forgiven loans. Effect: The City-Parish may not be collecting all program income to which it is entitled which could result in fewer dollars for the program. Cause: The administration of the City-Parish?s HOME Program was in transition during 2022. Recommendation: The City-Parish should reconcile the change in loan balances to collection reports produced by the loan servicer and to program income in the general ledger. Loans forgiven should be factored into the reconciliation as well. View of Responsible Official: The OCD utilizes a loan service agency to manage, administer and oversee the funds for the loan program. Requests for loan forgiveness are submitted to the OCD monthly for staff approval. All loans are reviewed for forgiveness in compliance with the Code of Federal Regulations and are approved by the OCD and the Office of the Mayor-President before being executed by the Parish Attorney?s Office to provide multiple layers of review. Case files are maintained at the OCD. Documentation of monthly reconciling has been provided along with an accounting ledger on the change in the loan balance in 2022 as caused by escrow support and loan forgiveness activities for low to moderate income residents, but we acknowledge that this process could be improved. The OCD is working to develop additional internal controls and will evaluate the current loan service agency?s effectiveness at managing, reconciling, and providing reports on the portfolio.