Financial Operations and Audit Support for Public Housing Authorities

Public Housing Authorities

Public Housing Authorities (PHAs) run some of the most heavily reported finance functions in the country, usually with some of the smallest teams. A single authority can be administering public housing operations, a Housing Choice Voucher program, capital funds on a multi-year cycle, and one or more mixed-finance or affiliate entities, each with its own reporting logic, its own funding source, and its own idea of what a fiscal year looks like.

The accounting itself is rarely the hard part. The hard part is that the reporting obligations arrive on fixed calendars set by other people, they overlap, and they all draw on the same handful of staff.

We work with mid-sized PHAs to make that manageable: strengthening the reporting workflows, tightening documentation discipline, and building the kind of year-round readiness that turns the annual audit from an event into a checkpoint.

Kearney & Partners performs no attest work. We are not your auditor, and that is deliberate. It means we can sit on your side of the table.

Where PHA finance teams actually lose time

Across engagements, the same four pressure points come up.

The submission cycle drives everything, and the calendar is unforgiving

The unaudited Financial Data Schedule (FDS) and project level reporting is due to HUD through HUD's Financial Assessment Subsystem for Public Housing (FASS-PH) 60 days after fiscal year-end. That is the first deadline and it does not move.

The second deadline is your state, county, or city. Most PHAs are component units of the primary government they operate under, and the primary government needs your numbers to close its own books and complete its own audit. That reporting package can be due earlier than your audited financial data, driven by the primary government's audit calendar rather than yours.

The third deadline is your audited FDS and project level reporting, due to HUD 9 months after fiscal year-end under the Single Audit reporting requirements at 24 CFR 902.33(c), unless your primary government has imposed an earlier deadline to hit its own.

The work does not sequence. It stacks. The team that just filed the unaudited FDS is the same team preparing the component unit package, and the same team pulling together audit documentation, and the same team responding to PBC requests. In most authorities that is three or four people carrying three deliverables to three different audiences in overlapping windows.

The fix is not working harder in the fourth quarter. It is treating the unaudited FDS as something you would be comfortable defending on the day you file it, so the audit does not become a reconstruction exercise on top of everything else that is already stacked on the same team.

Program-level separation that only exists on paper

Operating subsidy, Capital Fund Program grants, Housing Choice Voucher administrative fees, and housing assistance payments each carry their own eligible-use rules. Most authorities know this. Fewer can demonstrate it quickly when asked.

The recurring finding is not misuse. It is that the general ledger structure does not cleanly support the question, so answering "how this cost was allocated across programs" turns into a manual reconstruction every time someone asks. Interprogram due-to and due-from balances that never quite net to $0 are the usual symptom.

Restricted cash treated as one number

Restricted cash, tenant security deposits, replacement reserves, and program-restricted balances often sit in a small number of bank accounts and a smaller number of ledger lines. When the restriction is tracked in a spreadsheet rather than in the accounting structure, the reconciliation is only as durable as the person maintaining the spreadsheet.

The Single Audit, when it applies

A Single Audit is required when an organization expends $1,000,000 or more in federal awards during its fiscal year, under the Uniform Guidance at 2 CFR Part 200, Subpart F. For most PHAs of any size, this is not a question.

The risk that matters most is completeness. Every federal dollar you expended has to be on the Schedule of Expenditures of Federal Awards (SEFA), required at 2 CFR 200.510(b), and PHAs are structurally exposed to missing them. The most common source is a pass-through award from the primary government that arrives late in the year, without a clean pass-through letter, and without the CFDA or Assistance Listing number the SEFA requires. The award gets booked. The federal identity of the award does not. By the time the auditor asks the question, the general ledger cannot answer it and someone is reconstructing a year of pass-through activity from emails and grant files.

A SEFA built at year-end tends to capture what is easy to find. It tends to miss what is harder to see: late-arriving pass-throughs from the primary government, non-cash awards, program income tied back to a federal source, small direct awards to a program group outside of the finance team, or loans and loan guarantees under 2 CFR 200.502. Missed expenditures are the single largest exposure a Single Audit carries. They put the authority at risk of an incomplete SEFA, which is often a material weakness or significant deficiency finding and a materially incorrect major program determination, and they put the auditor at risk of having tested the wrong scope. Neither party wants to discover this in the final weeks of fieldwork, or worse yet, after the report has been issued.

Two mechanics are worth stating plainly, because both are routinely misunderstood. The SEFA does not decide what gets tested. It feeds the major program determination at 2 CFR 200.518, and that process decides which programs your auditor tests. An authority that treats the SEFA as a formality is building the foundation of its own compliance testing without looking at it. And the Single Audit does not incorporate your financial statement audit. They are separate obligations performed in the same window, by the same firm, on different scopes.

The fix is a SEFA maintained through the year rather than assembled at the end. Grants coded as federal at the point they are booked, pass-through letters requested and filed as they arrive, program income tracked back to its source. That is how the primary government's last-minute pass-through stops being a fire drill and becomes a routine entry.

What we do

Our work with PHAs runs across four service areas. Most engagements start in one and expand.

Audit process management

We manage the audit as a process rather than a scramble.

Readiness assessments ahead of the period under audit, so gaps surface while there is still time to fix them
Prepared by Client (PBC) list response coordination with named owners and tracked turnaround times
Documentation workflows and controls narratives built once and updated as controls change throughout the year, not rebuilt annually
SEFA preparation as a maintained schedule rather than a year-end build, with pass-through activity captured as it arrives
Auditor liaison and fieldwork coordination, so questions route to the person who can answer them

Financial operations transformation

Chart of accounts and fund structure redesign so program separation is native to the ledger rather than reconstructed on request
Close calendar and accountability structure across programs and entities
Interprogram and restricted cash reconciliation processes that hold up without their author present
Reporting infrastructure that produces the FDS submission as an output of normal monthly work, with the GL-to-FDS translation built into the close rather than reconstructed at deadline

Ongoing accounting and bookkeeping

Monthly close, reconciliations, and recurring reporting packages
Fund, program, and property-level accounting
Capital fund tracking across obligation and expenditure deadlines
Additional capacity for lean teams, without displacing your existing leadership

Strategic finance and operational advisory

Board and commissioner reporting that answers the questions actually being asked
Operational visibility for executive directors and finance directors
Financial planning across funding streams with genuinely different rules
Support through executive or finance leadership transitions, where institutional knowledge is the real asset at risk

How an engagement starts

Every engagement begins with a diagnostic rather than a proposal. We look at your current close, your last audit cycle, your reporting structure, and your submission history, and we come back with what we found and what we would do about it, in priority order.

Some authorities take that and run it internally. That is a legitimate outcome and we would rather tell you the truth about what you need than sell you something you do not.

Ideal fit

Mid-sized Public Housing Authorities administering multiple programs or funding streams, particularly those experiencing any of the following:

Audit cycles that consume the finance function for months
Repeat findings that recur despite corrective action plans
Recent or upcoming turnover in the finance function
Growth into mixed-finance, affiliate, or instrumentality structures that the existing reporting was never designed for
A capable team that is simply out of hours

What changes in the first cycle

We are deliberately cautious about promising outcomes, because the honest answer depends on what we find. What we can describe is the pattern.

In the first close after a workflow engagement, the visible change is usually ownership. Reconciliations have names against them and a date they are due, and the finance director stops being the routing layer for every question.

By the first audit cycle, the change is in what fieldwork feels like. PBC list responses go out in batches rather than in response to reminders, the documentation exists before it is requested, and the questions that arrive are about judgment rather than about where something is. Authorities frequently describe this as the first year the audit did not take over the department.

By the second cycle, the test is whether it held without us. That is the actual measure of the work, and it is why we build processes to be maintained by your team rather than by ours.

What does not change is your obligations. We do not reduce what HUD requires of you. We change how much of your organization it consumes.

Common questions

Do you replace our auditor? No. Kearney & Partners performs no attest work. We prepare your organization for the audit and support you through it. Your auditor remains independent, which is the point.

Do you replace our finance staff? Rarely, and it is not the goal. Most engagements make an existing team more effective by fixing the structure they are working inside. Where capacity is genuinely the constraint, we supplement rather than replace.

We already passed our last audit. Why would we need this? Passing is the floor. The question worth asking is what the audit cost you operationally: how many weeks it absorbed, how much of it was reconstruction rather than retrieval, and whether the same effort will be required again next year. Those are the costs that compound.

How quickly can you start? A diagnostic typically runs two to three weeks. The right time to start is not during fieldwork.