Finding 959322 (2023-003)

Federal Award Finding - 2023-003 – Special Tests and Provisions Criteria: Under the Special Tests and Provisions Capital Funds for Operating Costs compliance requirement for the Public Housing Capital Fund Program (CFP) (Assistance Listing Number 14.872), capital funds transferred to operations (Budget Line Item (BLI) 1406) are not considered obligated until the PHA has budgeted and drawn down the funds. To meet this requirement, the funds must be budgeted in BLI 1406 – Operations and the Authority must submit the voucher request in the electronic Line of Credit Control System (LOCCS). The Authority’s reported obligation amount in LOCCS must be the same amount in the Authority’s accounting system since the date of the voucher request in the LOCCS is the point of obligation for funds in BLI 1406. The voucher request date must occur before those funds are reported as obligated in LOCCS under the Obligations & Expenditure tab (24 CFR section 905.314(1)). Condition: During our audit, we noted CFP funds used for operations were not budgeted for in their capital fund budget. Cause: The Authority did not have any funds CFP funds budgeted for operations. Effect: The Authority is not in compliance with the special test and provisions of CFP compliance requirements. Recommendation: We recommend that the Authority develop internal controls pertaining to obligations and expenditures of federal awards to ensure compliance with all applicable regulations. Questioned Costs: None View of Responsible Officials: Management agrees with the finding.