Acing Your Audit: Finding the Right Mix of Financial Expertise
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For your agency to meet these stringent requirements, your finance team needs to be made up of experienced individuals with industry-specific compliance training. Staff members with this desired level of expertise will know exactly which preliminary steps to take to guarantee a clean housing audit; they will ensure that all financial reports are legally sound and work to address any potential weaknesses ahead of time.
But how do you know that your team is the right mix? The size and complexity of your agency are the most relevant factors to determining your answer to that question. If your PHA is particularly large and complex, this will affect the level of skills your organization needs. For example, your housing authority could be receiving several types of funds at the same time, including HUD funds, state funds, city funds, rural funds and perhaps even HOME funds. And if you add tax credits or an imminent RAD deal to the mix? Your team will need to possess a high degree of knowledge in order to sort through all the moving parts and ensure proper compliance.
When Small Isn’t Simple
Most PHAs across the United States are on the smaller end. However, there are some agencies that only operate 300 to 500 units of housing, but receive funds from many sources — and they still need to ensure a high degree of accuracy.
In these situations, the finance director wears many hats. In addition to being responsible for the financial data, he or she likely serves as the executive director or IT director. If a skills gap exists within your current financial team, consider hiring a specialist to assist with accounting or year-end financial statements. Under certain circumstances, such as isolated incidents of fraud or conflict of interest, it will be worthwhile for you to leverage outside fee accountants in lieu of hiring a full-time finance director or department.
Depending on the nature of your current team’s combined expertise, you may have to consider hiring an outside fee accountant to do the following:
- Maintain general ledgers
- Provide the necessary oversight to ensure that all accounting-related deadlines are met
- Report any unusual fiscal items to the Board of Commissioners
- Prepare closing statements and documents for all programs prior to the associated deadlines
- Conduct a pre-audit
- Develop internal control systems to determine potential audit findings
Medium Size, Mighty Spikes
Finance teams at medium-sized housing authorities might not suffer from the lack of resources that come with being a smaller agency, but they face a different struggle: the over/understaffing debacle. Finding the right staffing balance is especially tricky when you’re navigating annual Real Estatement Assessment Center submissions or occupancy reviews.
Depending on the project or time of year, your workload can spike drastically, which oftentimes means that your organization must suddenly pay overtime — stretching both staff and financial resources. Unfortunately, a medium-sized department that carries the extra staff to handle the spikes will likely find that some of its team members will be underutilized during slower periods of the year.
To achieve the ideal balance, consider hiring temporary workers, who will serve to support your finance team in managing spikes. By understanding where your specific skill and personnel gaps exist and working to address them, you will position your organization to tackle your next audit with confidence.
A larger housing authority can afford to hire full-time, skilled CPAs who specialize in audit preparation. In this scenario, you’ll need to flesh out your team by determining the ideal balance of complementary skill sets.
While your star players will be able to handle day-to-day accounting and auditing tasks, you may need to bring in outside consultants who specialize in certain areas, such as year-end closings. These outside partners will be able to offer valuable, new perspectives on your current accounting practices. Of course, you will need to leverage consultants in cases of potential fraud or wrongdoing within your own agency. Doing so will ensure that you address and resolve these financial missteps in the proper manner.
Ask yourself: Are there any major skills gaps within your finance team? If the answer is “yes,” act now to hire or recruit the necessary personnel — before an auditor comes knocking.