Last updated on July 10th, 2025
Internal controls in Public Housing Authorities ensure that public funds are being allocated and used properly. Management at all levels is responsible for implementing and updating these controls. When correctly implemented, a system of internal controls helps to minimize financial risk, prevent fraud, and maintain the accuracy of financial records. Internal control processes must be regularly assessed in order to maintain their effectiveness.
What are internal controls?
Internal controls are processes designed to help prevent fraud, enhance the reliability of financial statements, reduce the risk of unexpected financial losses, and ensure compliance with laws and regulations. Internal controls include procedures for authorization, recordkeeping, reconciliations, and auditing.
Why do PHAs need internal controls?
According to the Office of Inspector General’s Integrity Bulletin, internal controls serve the following purposes for PHAs: they protect assets (including cash and physical assets such as buildings), ensure the accuracy of records, promote operational efficiency, achieve the mission and goals of the PHA, and ensure compliance with policies, rules, regulations, and laws.
Implementing Internal Controls
Senior managers are responsible for establishing, enforcing, and maintaining internal control systems for key operational and financial processes. Some areas for which internal controls should be established include:
- Tenant eligibility
- Tenant files
- Cash management
- Procurement
- Payroll processing
- Budgeting
- Bank reconciliations
- Financial recordkeeping
- Financial reporting
- Internal audits
- Cash disbursements
- Cash receipts
The Office of Inspector General recommends the following internal control methods for maintaining operational effectiveness and preventing abuse:
- Establishing responsibility by assigning each task to only one person and maintaining organizational structure
- Implementing a separation of duties
- Using compensating controls such as additional monitoring or secondary sign-offs when a separation of duties is not possible
- Restricting access to systems, information, and assets to necessary parties only
- Creating policies and procedures with written directives
- Establishing systems of recordkeeping
Assessing Your Internal Controls
Regularly evaluating your PHA’s internal controls is a critical step for minimizing financial risk. Weaknesses in internal controls can develop if employees misunderstand the guidelines or if the guidelines are not updated to match changing regulatory requirements. All of the mechanisms discussed above must be periodically reviewed to ensure that they are achieving their objectives in preventing risk to the PHA.
Reviewing internal controls may involve the use of risk assessments, which identify potential threats and weaknesses in the operations of the organization. Audits of financial records can also help to identify gaps in compliance. If weaknesses are found, then operating procedures can be amended accordingly.
Need help reviewing your internal control processes? RBT CPAs’ experts are available to provide internal control assessments for your PHA. At RBT CPAs, we understand the unique compliance and regulatory environment that PHAs operate within. Our firm has been serving organizations in the Hudson Valley and beyond for more than 55 years. You can count on RBT CPAs’ professionals to help maintain your PHA’s reputation for transparency, accountability, and trustworthiness by providing exceptional accounting, advisory, audit, and tax services.
For more information about how our firm can help to maintain the financial health of your PHA, visit our website or give us a call.