Gallup Housing Authority

Type of Finding: (E and F) Significant Deficiency in Internal Control over Compliance of Federal Awards and Instance of Noncompliance related to Federal Awards Funding Agency: U.S. Department of Housing and Urban Development Title: Low Rent Public Housing AL #: 14.850 Award #: N/A Award Period: July 1, 2020 ? June 30, 2021 Estimated Questioned Costs: Unknown Statement of Condition The Utility Expense Level (UEL) is used to calculate the utility portion of the Operating Fund subsidy. The UEL is a primary component of the operating subsidy grant revenue provided to the PHAs annually. The Housing Authority receives invoices for utilities. The consumption and cost data from those invoices are aggregated, in an Excel workbook or other platform, commonly referred to as a utility ledger. The aggregated data is transferred to the Form 52722. The From 52722 is completed once a year and is based off prior year utility ledgers. During our test work, we sampled 10 utility bills from the ledgers from fiscal year 2020 that were part of the Form 52722 calculation for fiscal year 2021. During our testing we noted that the consumption was not accurately entered from the utility bill to the utility ledger. Additionally, upon further review of the utility ledgers, it was discovered that there were formula errors, which then caused the summary page to not accurately present the information. The summary page was used to enter the information into the Form 52722. The information on Form 52722 is then entered into Form 52723 (Calculation of Operating Subsidy) and factored into the amount the Housing Authority requests from U.S. Department of HUD for the upcoming year. During our review of procedures over review of the utility ledgers, it was determined the utility ledgers were not reviewed by employee, who is not involved in entering the information. Criteria The Utility Expense Level (UEL) is used to calculate the utility portion of the Operating Fund subsidy. The UEL is a primary component of the operating subsidy grant revenue provided to the PHAs annually. PHAs must retain such data pursuant to 990.325. PHAs receive invoices for utilities. The consumption and cost data from those invoices are aggregated, in an Excel workbook or other platform, commonly referred to as a utility ledger. The aggregated data is transferred to the Form 52722. The information on Form 52722 is then entered into Form 52723 and factored into the amount the Housing Authority requests from U.S. Department of HUD for the upcoming year. Cause The utility ledgers were not reviewed by employee, who is not involved in entering the information. Effect The information entered in Form 52722 and Form 52723 is not accurate and an incorrect amount of Operating Subsidy could be requested by the Housing Authority. Recommendation We recommend an additional employee, other than the preparer of the utility ledgers, review and sign off on the utility ledgers before the information is entered into the Form 52722. Additionally, we recommend the reviewer request support for at least a sample of utility bills included on the utility ledgers, to confirm accuracy of the information entered. View of Responsible Officials and Corrective Action Plan Per recommendation above, an additional employee, other than the preparer of the utility ledgers, will review and sign off on the utility ledgers before the information is entered into the Form 52722. Additionally, the reviewer will request support for at least a sample of utility bills included on the utility ledgers, to confirm accuracy. In addition, beginning in January 2022 UEL expense logs will be prepared quarterly (at Minimum) instead of annually. The reviewer will also run a check on UEL excel logs for incorrect or miscalculating formulas. Finding resolution timeline: The above recommendations are effective immediately, with an increased frequency in data compilation and review beginning in January 2022. We consider this item to be resolved. Designation of employee position responsible for meeting this deadline: Accountant, GHA

View of Responsible Officials and Corrective Action Plan Per recommendation above, an additional employee, other than the preparer of the utility ledgers, will review and sign off on the utility ledgers before the information is entered into the Form 52722. Additionally, the reviewer will request support for at least a sample of utility bills included on the utility ledgers, to confirm accuracy. In addition, beginning in January 2022 UEL expense logs will be prepared quarterly (at Minimum) instead of annually. The reviewer will also run a check on UEL excel logs for incorrect or miscalculating formulas. Finding resolution timeline: The above recommendations are effective immediately, with an increased frequency in data compilation and review beginning in January 2022. We consider this item to be resolved. Designation of employee position responsible for meeting this deadline: Telisia M Buggie, Accountant, GHA

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