Finding 977223 (2020-002)

Finding 2020-002: Rolling Forward Equity Balances: Federal Agency: U.S. Department of Housing and Urban Development. CFDA 14.871, Section 8 Housing Choice Vouchers, Criteria: PHAs are required to maintain complete and accurate accounts. HUD enters into an Annual Contributions Contract (“ACC”). The ACC requires the PHA to properly account for program activity. Proper accounting requires that (1) account balances are properly maintained, (2) records and accounting transactions support a proper roll-forward of equity, and (3) errors are corrected as detected. Condition: The unaudited year end working trial balance reflected total positive equity of $844,060 and did not reflect correct HAP and Administrative Fee equity balances. This condition continues from previous years. Reference prior year finding 2019-002. Cause: PHA management is not making the proper entries to ensure the HAP and Administrative Fee equity balances are stated correctly. Effect: This could result in the PHA not being funded correctly and may result in HUD’s Office of Inspector General findings against the PHAs. Questioned Costs: None Recommendation: PHA management must close the books each year and ensure that the HAP and Administrative Fee equity accounts are properly stated. Management’s Views and Corrective Action Plan Management’s views and corrective action plan are included at the end of this report.