We completed a corrective action verification review of the audit recommendations for findings 1 and 2 of Audit Report Number 2006-NY-1005, issued February 21, 2006 pertaining to the general operations of the Utica Municipal Housing Authority, Utica, New York (Authority). The purpose of the corrective action verification was to determine whether the selected audit recommendations were implemented and the deficiencies cited in the report were corrected.
The corrective action verification review found that although the Authority has effectively implemented the recommendations, the appropriate action was not taken for all of the recommendations in the audit report on the general operations of the Authority. It was determined that the Authority had certified to the Buffalo Office that it had no unrestricted nonfederal funds available for the repayment of disallowed costs. The Authority also complied with the requirements of REAC’s Accounting Issue No.7, concerning disallowed costs, having recorded $618,446 as an “Inter-program Due From” account for the disallowed costs included in Finding 1 and 2 of the Audit Report. These amounts will remain on the Authority’s book until reimbursed with nonfederal funds or written documentation has been received, in a future period, relieving the Authority of its obligation of reimbursement of these monies. Specifically for recommendations 1B, 2C, and 2E, the Buffalo Office followed through with all existing protocols and guidance at the time the audit was conducted. However, based on the implementation of asset management and the existence of Central Office Cost Center nonfederal funds that were not available when these recommendations were initially closed out, we have determined that these recommendations should be reopened in HUD’s Audit Resolution and Corrective Action Tracking System (ARCATS) to reflect future reimbursement with nonfederal funds. The Authority established a payable account due to HUD. However, since this account was established and cannot be written-off until the Authority provides evidence to support that their attempts to earn nonfederal funds were unsuccessful; it is necessary for HUD to keep the recommendation open as a receivable in ARCATS until the funds are repaid, or the payable account at the Authority is properly written off.
We recommend that HUD reopen recommendations 1B, 2C, and 2E in HUD’s Audit Resolution and Corrective Action Tracking System (ARCATS) to reflect future reimbursement with nonfederal funds.