Finding Text
2023-004 – SPECIAL TESTS AND PROVISIONS – CAPITAL FUNDS FOR OPERATING COSTS
Significant Deficiency / Other Matter
U.S. Department of Housing and Urban Development
CFDA #: 14.872 – Public Housing Capital Fund
CRITERIA
A PHA may use Capital Funds for operating costs only if it is included in the CFP 5-Year Action Plan that is approved by the PHA Board of Commissioners and HUD, and limited as described in paragraphs (l)(1) and (2) of this section. Capital Funds identified in the CFP 5-Year Action Plan to be transferred to operations are obligated once the funds have been
budgeted and drawn down by the PHA. Once such transfer of funds occurs, the PHA must follow the requirements of 24 CFR part 990 with respect to those funds.
CONDITION
The Authority had obligated capital funds related to operations (BLI 1406) prior to voucher request date for these draws.
CAUSE
Prior to March 2023, management was unaware of this requirement.
EFFECT
The Authority had obligated funds for operations prior to the voucher request date of these
draws.
QUESTIONED COSTS
None Identified.
CONTEXT
The Authority had five open capital fund grants during fiscal year 2023 (Capital Fund formula grants 2020-2023 and an Emergency Capital grant). The Authority drew down funds for operating costs under capital fund year 2022. Total capital fund draws for operating costs under this grant during 2023 aggregated $592,497.
REPEAT FINDING
This finding is repeated from 2022-007.
RECOMMENDATION
The Authority should continue with their corrective action plan implemented in April 2023, in which funds are only obligated after which the Authority has a signed contract or agreement in place.
AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION
See Corrective Action Plan.