Housing Authority of the City of Lexington, NebraskaLocal Government

Finding 2023-002: Excess Residual Receipts Material Weakness/Noncompliance Section 202 Capital Advance – 14.157 Special Tests and Provisions Criteria: Annually upon expiration and/or renewal of the PRAC, residual receipts account balances in excess of $250 per unit must be remitted to HUD. Condition: The Authority is allowed to maintain up to $4,500 in its residual receipts. The Authority failed to determine excess receipts due to HUD when its PRAC renewed November 1, 2022. The excess due to HUD at June 30, 2023 was $5,292.34. Cause: The Authority did not have procedures to annually review the residual receipts account balance at the PRAC renewal date. Effect or Potential Effect: The Authority did not comply with the regulation to remit excess residual receipts to HUD. Recommendation: The Authority has had significant vacancies this past year which has reduced its ability to pay its vendors or capital improvements. Prior to remitting funds back to HUD, the Authority should contact its HUD representative to see if it would be possible to use the excess residual receipts instead of remitting them to HUD. If not, the Authority should begin the process to remit the funds back to HUD. The Authority should establish an annual procedure to review residual receipt balances on the PRAC renewal and remit funds as required. View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.