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

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

3. 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. 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. 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. 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. 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. 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 9

10. 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. 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. 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. 13 Internal Controls Document Expectations of Staff Track & Safeguard Assets Checks & Balances Board Oversight