BOARD OF COMMISSIONERS TRAINING
U. S. Dept of Housing and Urban Development
Financial Management
March 2009
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Board Of Commissioners Training Series
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
The Commissioner’s Role
The Executive Director’s Role
Agency Management
Financial Operations and Oversight
Physical Facilities and Maintenance
Procurement and Contracting Overview
Preventing and Resolving Audit Findings
Performance Measures
PHAS, MASS, FASS, PASS, SEMAP
IX.
X.
Conducting an Effective Board Meeting
Emergency and Disaster Preparedness
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Questions ? ? ? ?
• Am I fully informed about the financial status and operating
condition of our Housing Authority (HA), the amount of
reserves, or the amount of Federal subsidy received for
different programs?
• Do the Board members receive full reports at Board
meetings concerning the financial and operating condition of
the Authority?
• Do I carefully review and fully understand the items
proposed in budgets before voting for approval?
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Four Major Functions
• Financial Management is one of the FOUR interrelated
functional areas of HA operations.
• Sound functional financial management is essential to the
effective operations of all areas of the HA.
BOARD OVERSIGHT
GENERAL MANAGEMENT
PROGRAM
MANAGEMENT
FINANCIAL
MANAGEMENT
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Roles of Commissioners
The Commissioners role is management and
executive in nature:
•Review and monitor budgets and other financial
documents to ensure expenditures are in compliance with
federal, state and local laws and other requirements.
•Review and approve policies and procedures to establish
sound internal controls.
•Review and approve policies and procedures which will
detect and prevent program fraud, waste, mismanagement
and abuse.
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Role of Executive Director
The focus of the ED’s role is management and
operations
•Coordinate and prepare all HA operating budgets
•Collect rents and enforce lease terms
•Supervise cash management and bank reconciliations
•Enforce internal control procedures and policies
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Role of Executive Director – Cont’d
• Monitor operations for fraud and abuse
• Maintain overall compliance with federal, state and local
laws, as well as PHA policy and procedures
•Keep the Board of Commissioners informed of any
problems, such as audit concerns, major resident issues,
financial status, and changes to laws
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Financial & Fiduciary Responsibilities
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Make sound business decisions
Be knowledgeable about the financial status of your agency
Review and understand financial reports
Establish internal controls
Safeguard agency assets
Institute Standard Operating Procedures
Review and understand IPA audits
Closely monitor the resolution of audit findings
Understand and adhere to investment policies
Avoid conflicts of interest and apparent conflicts of interest
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Budgets
The Board’s Responsibility is exercised by:
•Reviewing Budget Proposals
•Ask Questions
•Approve or Modified Approval
•Monitoring the budget
Most budgets are not reviewed/approved by HUD
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Prevent Fraud, Waste and Abuse
• Establish and Enforce Internal Controls
• Clear Job Responsibilities and Separation of Duties
• Personnel Selection
• Independent Audits and HUD Reviews
• Accountability of Staff
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Internal Controls
The system within a PHA consisting of its plan for
organization, assignment of duties and responsibilities, design
of accounts and reports, and all measures and methods
employed to
(1) protect its assets,
(2) to encourage the accuracy and reliability of
accounting and other operating data and reports,
(3) to promote and judge the operational efficiency of
all aspects of the PHA's activities, and
(4) to communicate managerial policies and to
encourage and measure compliance.
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Cash Receipts
• Internal control over cash receipts must be provided to
expedite the flow of work, to improve accuracy, and to
ensure accountability of cash received.
• While adequate internal control does serve as a
deterrent to possible misappropriation or diversion of cash
by employees, it also serves as a protection of the
employees by placing responsibility and accountability.
• Internal Controls should be practiced to the greatest
extent possible given the size of the housing authority
• Duties should be segregated so that no one person is in
complete control of recording receipts and depositing
receipts.
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Cash Disbursements
• Internal control over disbursements must be provided to
ensure disbursements are made only for legitimate purposes.
• The Board should designate by resolution the personnel
authorized to sign and countersign checks
•All checks should require at least two signatures
• All checks should be numbered, issued, and recorded in the
cash disbursements register in numerical sequence and
review procedures to ensure compliance
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Cash Disbursements
CONTINUED
• The signing or countersigning of checks in advance must be
prohibited. (Don't sign blank checks)
• Checks should only be signed after reviewing the supporting
documentation (invoice).
• All duties should be segregated so that no one person is in
complete control of a disbursement transaction.
• Documents, such as purchase orders, vendors invoices,
receiving and inspection reports, and contractor's estimates
should be carefully examined
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Board Meeting Information
• Copy of the latest (previous months) balanced bank
reconciliation. Large, recurring amounts for deposit in transit
must be discussed and resolved.
• Summary of income/expenses by account classification,
along with comparisons to all program budgets.
•Substantial deviations from program budgets should be
discussed and corrective action taken, as necessary.
• Listing of check vouchers issued/voided since previous
meeting with basic information, such as date, check number,
payee, purpose and amount. The listing should be reviewed
for any patterns, unusual payments or payees.
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Board Meeting Information
CONTINUED
• Listing of monthly rental collections/deposits.
• Subsidy payments and other transfer payments. Large
variations from month to month should be explained.
• Listing of investments and monthly activity in this area, if
any.
• Summary of travel costs with details regarding who
traveled, the purpose of the trip and costs.
• Summary of tenants accounts receivable and vacancy rate.
If problems exist, Executive Director should furnish
information on actions take to resolve.
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Board Meeting Information
CONTINUED
• Summary of actions taken to deal with any outstanding HUD
or IPA audit findings.
• Update on status of capital improvement projects.
• Information on contracts awarded where board approval was
not required - purpose/cost/award method.
• Information on staffing, such as payroll, number of vacant
positions, etc.
• Status and consideration of open issues tabled at prior
meetings for further action.
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Commissioner “DO's”
• Do pass resolutions and policies only after thorough
discussion and understanding of the purpose, usage, intent
and implications
• Do monitor policies and procedures from time to time to
ensure that the result is what was intended
• Do establish monitoring controls to detect and prevent
conflicts of interest, fraud and abuse
• Do ensure that an audit is conducted annually and that the
report is reviewed by the Commissioners. If you have an area
of concern, you may ask the auditors to expand their review
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Commissioner “DO's”
CONTINUED
• Do conduct meetings at least quarterly with Resident
Council leaders to solicit comments and input. We
encourage Commissioners to consider training sessions for
Resident Council leaders on the constructive role they can
perform.
• Do ensure that the PHA operates legally and with integrity.
Establish high ethical standards for PHA staff and act as
positive role models.
• Do learn what the common risks are and be alert for
problems such as embezzlement, improper procurement, and
other irregularities.
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Commissioner “DO's”
CONTINUED
• Do accept reimbursement for expenses incurred for official
PHA business.
•Do avoid any Conflict of interest-No board member may
have an interest, direct or indirect, in businesses which
provide services or materials to the authority.
• Do volunteer your time - Compensation of board members,
such as salary or payment for meetings attended, is not
permissible from PHA funds.
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Commissioner “DON’Ts”
CONTINUED
• Don't sign blank checks, or checks that are not backed up
with bills, invoices or vouchers.
• Don't have any bank accounts which are controlled by one
(1) signature.
• Don't, if at all possible, let the persons who are authorized
to sign checks reconcile bank statements.
• Don't use PHA supplies, equipment, machinery,
construction or rehabilitation supplies or staff for personal
use.
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Commissioner “DON’Ts”
CONTINUED
• Don't use PHA tax exempt status or PHA credit cards for
personal use.
• Don't use PHA contractors for personal purposes while they
are engaged in PHA work.
• Don't accept gifts, dinners, or other gratuities from
contractors or those bidding for PHA work.
• Don't become involved in any business relationships between
yourself and the PHA where you or your company are dealing
with PHA matters.
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Audit Findings
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Audit Findings are an indication that a significant
problem exists within your organization.
Preventing and resolving audit findings is a major
component of the performance of your management
and fiscal oversight responsibilities.
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Audit Findings Resolution
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The prevention of findings serves to protect the agency.
The resolution of findings serves to remediate the damage
caused and to prevent reoccurrence.
Without resolution the problem will continue, become more
complex and will negatively impact your agency’s operations.
Depending upon the nature and severity of the finding it may
result in the agency being designated as troubled.
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Public Housing Assessment System
MASS
PASS
FASS
RASS
Management Operation Assessment
Physical Inspection Assessment
Financial Assessment
Resident Satisfaction
30
30
30
10
points
points
points
points
A score of less than 60 percent total, or of less than 18 of 30 in any
of the MASS, PASS or FASS, will result in a HUD designation of your
PHA as a Troubled Performer (requiring recovery in short time
frames, and using sanctions and other remedies, for any failures).
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Financial Assessment (FASS)
Based on
PHA Financial Data System (FDS) Submissions
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Sub-Indicator
Sub-Indicator
Sub-Indicator
Sub-Indicator
Sub-Indicator
Sub-Indicator
Balance
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2
3
4
5
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Current Ratio
Expendable Fund Balance
Tenant Receivables Outstanding
Occupancy Loss
Expense Management & Utilities
Net Income/Loss divided by the Expendable Fund
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Section Eight Management
Assessment Program (SEMAP)
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The local Public Housing Hub Office or Program
Center is charged with the responsibility for assessing and
scoring the performance of PHAs, administering the Section 8
Housing Choice Voucher program.
A score of less than 60 percent total will result in a HUD
designation of your PHA as a Troubled Performer (requiring
recovery in short time frames, and using sanctions and other
remedies, for any failures).
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SEMAP consists of these Indicators:
Based on PHA SEMAP certification:
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Indicator
Indicator
Indicator
Indicator
Indicator
Indicator
Indicator
1
2
3
4
5
6
7
–Selection from Waiting List
– Rent Reasonableness
– Determination of Adjusted Income
– Utility Allowance Schedule
– HQS Quality Control Inspections
– HQS Enforcement
– Expanding Housing Opportunities
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SEMAP consists of these Indicators:
Based on PHA PIC system submissions:
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Indicator
Indicator
Indicator
Indicator
Indicator
Indicator
Indicator
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Deconcentration Bonus Indicator
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8 – Payment Standards
9 – Annual Reexaminations
10 – Correct Tenant Rent Calculations
11 – Pre-Contract HQS Inspections
12 – Annual HQS Inspections
13 – Lease-Up
14 – Family Self-Sufficiency Enrollment
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