Program Finance, Audits & Internal Controls

1. Program Finance, Audits & Internal Controls Julie Miles, Financial Analyst HUD-Kansas City, KS 913-551-5529

2. Program Finance Low-Rent Public Housing Section 8 Housing Choice Vouchers

3. Public Housing Operations • Annual Submission of Operating Subsidy Calculation • Operating Subsidy Funded on Calendar Year Basis • PHA Draws Funds from the Line of Credit Control System (LOCCS)—Monthly Limit • Eligible for Costs to Operate Public Housing • Operating Funds Can Only Pay for Low-Rent Program Costs—Cannot Transfer or Loan Funds to Any Other Program, Including Section 8 Housing Choice Voucher Program

4. Operating Subsidy Formula • Funding Period 1/1 to 12/31 • Reporting Period 7/1 to 6/30 before Funding Period • CY 2007 PHA Level—1 Calculation • CY 2008 & Future Project/AMP Level—Multiple Calculations • Expense Level Based on Project Characteristics • Less Project Rent (Frozen at 04 Level CY07 to CY09) • Plus Project-Share of Add-ons • Equals Subsidy Eligibility • Less Proration

5. Section 8 Housing Choice Voucher (HCV) Program Operations • 2-Part HCV Grant • Administrative Fee • Housing Assistance Payment (HAP) • Must Track Admin & HAP Separately • Funded on Calendar Year Basis • Leasing & Expense Data Reported to the Voucher Management System (VMS)

6. HCV Admin Fee • Eligible for Admin Costs & HAP Costs in Excess of HAP Grant (up to Baseline) • CY 2009 Funding To Be Announced • CY 2008 Funding Based on Vouchers Under HAP as of the First Day of the Month • Calculated Quarterly Based on VMS – Subject to Proration • Cannot Use for Over-Leasing (Vouchers Exceeding Annual Baseline)

7. HCV HAP • Eligible for HAP Costs Only • CY 2009 Funding To Be Announced • CY 2008 Funding Based on VMS Data for October 06 to September 2007 Plus Inflation • Cannot Use for Over-Leasing (Vouchers Exceeding Annual Baseline) • 2004 & Prior—HAP Funding Adjusted at Year-End to Actual Cost (Year-End Settlement) • 2005—First Year HAP Budget-Based, No Adjustment to Actual Cost

8. Reserves/Net Assets • Must Track Admin (Unrestricted) & HAP (Restricted) Separately • 2003 & Prior Reserves—Use For Other Housing Purposes Permitted By State & Local Law • 2004 & After—HAP Reserves Only for Provision of Section 8 Tenant-Based Rental Assistance, Including Related Development

9. Audits & Internal Controls Audit Requirements Financial Assessment Internal Controls

10. Requirements • OMB Circular A-133 Requires Single Audit if PHA Expends $500K or More in Federal Funds • Optional Non-A-133 Audit if Expends Less Than $500K (Unless Audit Required by State Law) • Within 9 Months of FYE: • Submit Electronic Copy of Audit to Real Estate Assessment Center (REAC) • Submit Paper Copy of Audit and Management Letter, if Noted, to Field Office

11. Requirements (continued) • Audit May Include: • Specific Issues • Earlier Submission Date • GAAP Flyer #6 Procuring An Audit • http://www.hud.gov/offices/reac/pdf/gaapflyer6.pdf

12. Assessment • FASS Score Based on Unaudited Financial Submission to REAC • FASS Score Adjusted Based on Audited Financial Submission to REAC • Account Balance Changes • Audit Opinion Penalties • Audit Finding Penalties

13. Internal Controls • Document Expectations of Staff • Track & Safeguard Assets • Checks & Balances • Board Oversight