Finding Text
Federal Agency: U.S. Department of Housing & Urban Development
Federal Program: Section 8 Housing Choice Voucher Cluster
Assistance Listing Number: 14.871
Award Period: July 1, 2022 – June 30, 2023
Compliance Requirement: Reporting – FDS Reporting
Type of Finding: Significant Deficiency in Internal Control Over Compliance, Non-Compliance
Condition: The County did not have adequate controls over the financial reporting process and, as a result, prior period adjustments were required in Financial Data Schedule (FDS) line item 11040.
Criteria or specific requirement:
Compliance: The Uniform Financial Reporting Standards (24 CFR section 5.801) require PHAs to submit timely GAAP-based unaudited and audited financial information electronically to HUD. The Financial Assessment Subsystem (FASS-PH) system is one of HUD’s main monitoring and oversight systems for the HCVP.
The accuracy of the following transfer items should be reviewed in conjunction with supporting documentation and/or HUD approvals. For FDS reporting, cash and investments in a cash pool or working capital account should be reported as such and not reflected as due to/due from. Amounts reported on these FDS Lines could represent unallowable costs.
a. FDS Line 144 – (Inter Program – Due From)
b. FDS Line 10020 – (Operating Transfer Out)
c. FDS Line 10030 – (Operating Transfers From/To Primary Government)
d. FDS Line 10040 – (Operating Transfer From/To Component Unit)
e. FDS Line 11040 – (Prior Period Adjustments, Equity Transfers, and Correction of Errors)
Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the 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. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Context: The County identified prior-period errors of $700,797 while preparing the FDS report.
Questioned costs: None.
Cause: The County did not have the appropriate controls over the financial reporting process to prevent or detect misstatements.
Effect: The County recorded adjustments for the corrections of errors related to the overstatement of prior year revenues totaling $700,797.
Recommendation: We recommend the County review and enhance its internal controls, policies, and procedures to ensure that the amounts included on the FDS are accurate.
Views of responsible officials:
Management agrees with the finding. The department will modify its SOP to include a second reviewer before the final FDS figures are submitted. The first submission is due in August and the final submission is due in March.