Finding Text
Finding 2023-002 – Accounting Controls – Cash Management & Program Compliance
ALN 14.850 – Grant years 2022, 2023 – Noncompliance & Material Weakness
Criteria:
Regulations at 2 CFR Part 200, Uniform Administrative Requirements, outline the internal control requirements for recipients of federal grant funds. Non-Federal entities must, “Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.”
Condition & Cause:
As of the audit field date, the Authority has failed to draw down operating subsidy applicable to fiscal year 2023. The Authority felt that due to excessive amounts of cash on hand, they did not need or want to draw the appropriated funding down. However, the Authority’s Public Housing program would end the fiscal year with a significant deficit without these funds.
Effect:
Failure to draw down operating subsidy in the correct period results in a misstatement of program operations and a failure to match the appropriated revenue with expenses incurred. Further the Agency could have used these funds to further its approved mission and goals related to low income and affordable housing.
Recommendation:
We recommend that the PHA establish an appropriate cash management procedure that facilitates timely requests of appropriated subsidy. Operating Subsidy should be drawn down on a regular monthly basis.
Questioned Costs: None
Repeat Finding: No