Finding Text
U.S. Department of Housing and Urban Development ‐ CFDA #14.850
Public and Indian Housing
Applicable Federal Award Number and Year – Public and Indian Housing ‐ 2021
Special Tests and Provisions: Project‐Based Budgeting and Accounting
Material Weakness in Internal Control over Compliance
Criteria – PHAs who have implemented asset management are to develop and maintain a system of budgeting and accounting for each project in a manner that allows for analysis of actual revenues and expenses associated with each property (24 CFR section 990.280(a)).
Condition – During our testing, we identified several errors in how expenses were being charged and or allocated to the projects. In addition, there was insufficient documentation supporting how allocation methods were determined and there was no review of the allocation calculations by another individual.
Questioned Costs – None Reported.
Context/Sampling – A non‐statistical sample of 60 expenditures were selected for testing. 12 out of the 60 expenditures utilized an allocation method that was incorrect or lacked sufficient documentation on how the allocation method was determined.
Effect – Failure to implement and maintain a proper control process could result in the misallocation of costs to a project or the program.
Cause – The Authority has experienced significant staff turnover and the Authority’s controls are currently not adequately designed and operating.
Repeat Finding from Prior Year – Yes.
Recommendation – The Authority should ensure that all allocation methods are reviewed and adjusted regularly for changes within the program. Additionally, a control process should be implemented to review the application of allocation methods and their reasonableness.
Views of Responsible Officials – Management agrees with the finding.