Finding 6942 (2023-001)

Condition Testing of interfund receivable balances owed to the Low Rent Public Housing (LRPH) programs from the nonfederal program indicated potential unallowable uses of LRPH grant funds . Criteria The Operating Fund is designed to make financial assistance available to PHA's for the operation and management of public housing . The use of a centralized revolving fund allows the use of one program's cash to cover expenses of another program which is subsequently reimbursed within a reasonable amount of time. Inter-program due to and due from balances, not reconciled on a timely basis, indicate the existence of temporary loans and are unallowable. Cause The COCC program had not generated sufficient cash required to reimburse the revolving fund for expenses incurred on its behalf before the end of the operating cycle. Effect It appears LRPH funds in the amount of$616,585 were used to cover costs of non-federal programs. This is considered an unallowable use of grant funds and may be subject to repayment. Questioned Costs $616,585 Recommendation We recommend the Authority reconcile and settle interfund balances on a monthly basis . In addition , we recommend the Authority establish controls to restrict interfund transactions for which there is no certainty of reimbursement before the accounting period cut-off.