The Housing Authority of the City of Hazlehurst, Mississippi

2020-001 - Capital Fund Program Draws Not Disbursed in a Timely Fashion Criteria: 24 CFR 905 - THE PUBLIC HOUSING CAPITAL FUND PROGRAM list the general requirements and regulations governing the program. Funds are to be drawn down and spent in a timely fashion.Condition: As a result of our audit procedures we determined that the capital fund program had draws against the fees and costs, site improvement and dwelling structures budget line items by the former executive director on August 4, 2017 yet have not been spent. During the current year, $57,199 was drawn down in September and recorded as unearned revenue by the Authority, not being expensed within the required three days. Cause: The Authority did not observe established requirements for the expenditure of capital fund proceeds and was able to circumvent controls. Monitoring was not sufficient to detect the breach of controls.Effect: The Authority?s capital fund program may have been used to cover shortfall in the cash accounts. Recommendation: We recommended that Authority?s new management adhere to sound control procedures and diligently adhere to the requirements and regulations of the capital fund program and to seek HUD?s guidance as to the amounts recorded as unearned revenue.Management's Response: As we were made aware of these issues, we immediately reviewed current internal controls and procedures and intend to more closely monitor the compliance with capital fund programs regulations. We have prepared and implemented a detailed Corrective Action Plan to address this finding and will seek HUD?s guidance in remedying the issue. Current Status: The Authority recorded a deferred credit for the CFP draw made by the former executive director and determination has not been made as to the eligibility of the expense. This finding is repeated from the prior audit.

2020-002 ? Pledged Collateral Not Sufficient to Cover Deposits in Excess of FDIC Limits Criteria: Deposits in excess of the Federal Depository Insurance Corporations (FDIC) the first $250,000 of the authority?s deposits at each institution must be collateralized by securities held by pledging financial institution in the authority?s name. Condition: As of year ended September 30, 2020, the authority had $390,092 in bank deposits, $250,000 of which was covered under the FDIC coverage. $140,092 of deposits in excess of FDIC insurance are not covered by pledged securities. Cause: Monitoring was not sufficient to detect the breach of controls.Effect: The Authority?s deposits could potentially be at risk and unrecoverable if the financial institution succumbs to financial stress. Recommendation: We recommended that Authority?s management adhere to sound monitoring procedures for deposit and seek collateral pledged in the Authority?s name at the financial institution.Management's Response: As we were made aware of these issues, we immediately reviewed current internal controls and procedures and intend to more closely monitor the compliance with deposit regulations. We have contacted the financial institution to cover the excess of deposits with collateral pledged in the Authority?s name.