Criteria
Tenant lease files are required to be maintained and tenant eligibility determined in accordance with
HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs.
Condition
In connection with our lease file review, we noted the following deficiencies:
- 2 out of 6 lease files for existing tenants did not follow EIV guidelines, EIV reports were generated
outside of the allowed 120-day period.
- 2 out of 6 lease files for existing tenants did not contain necessary documentation, files were
missing gross rent change forms and latest executed versions of HUD-50059 form.
- 2 out of 6 lease files for existing tenants were not certified before required recertification date, one
file was 60 days late, second file was 116 days late.
- 1 out of 2 lease files for former tenants had late security deposit refund.
Cause
Management's policies with respect to the determination of eligibility and the maintenance of tenant
lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs were not consistently followed.
Effect or Potential Effect
The procedures for eligibility and maintaining tenant lease files were not consistently applied in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent
subsidies paid by HUD.
Recommendations
Management should establish procedures and monitor compliance with those procedures to ensure
that tenant eligibility is correctly determined and that tenant lease files are properly maintained in
accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs.
Auditor Noncompliance Code:
Z. Other.
View of Responsible Officials
Management agrees with the finding. Management’s plan of action for non-compliance of the HUD
Guidelines includes the immediate steps below:
1. Provide additional training and resources to ensure that the staff has a clear understanding
of HUD requirements that will include the importance of adhering to procedures and
guidelines with a specific focus on the EIV requirements and reporting, along with the
timely processing of annual recertifications.
2. Implement increased monitoring and oversight mechanisms to detect and correct
compliance issues.
3. Establish clear accountability measures for not following procedures through appropriate
corrective actions.
4. Effectively communicate the importance of following procedures to all staff, emphasizing
the impact on organizational efficiency and compliance.
5. Encourage a culture of continuous improvement where procedures are regularly reviewed,
communicated with the staff and provide regular training of changing circumstances or best
practices.
Finding Resolutions Status:
Resolved
Criteria
Tenant lease files are required to be maintained and tenant eligibility determined in accordance with
HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs.
Condition
In connection with our lease file review, we noted the following deficiencies:
- 2 out of 6 lease files for existing tenants did not follow EIV guidelines, EIV reports were generated
outside of the allowed 120-day period.
- 2 out of 6 lease files for existing tenants did not contain necessary documentation, files were
missing gross rent change forms and latest executed versions of HUD-50059 form.
- 2 out of 6 lease files for existing tenants were not certified before required recertification date, one
file was 60 days late, second file was 116 days late.
- 1 out of 2 lease files for former tenants had late security deposit refund.
Cause
Management's policies with respect to the determination of eligibility and the maintenance of tenant
lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs were not consistently followed.
Effect or Potential Effect
The procedures for eligibility and maintaining tenant lease files were not consistently applied in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent
subsidies paid by HUD.
Recommendations
Management should establish procedures and monitor compliance with those procedures to ensure
that tenant eligibility is correctly determined and that tenant lease files are properly maintained in
accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs.
Auditor Noncompliance Code:
Z. Other.
View of Responsible Officials
Management agrees with the finding. Management’s plan of action for non-compliance of the HUD
Guidelines includes the immediate steps below:
1. Provide additional training and resources to ensure that the staff has a clear understanding
of HUD requirements that will include the importance of adhering to procedures and
guidelines with a specific focus on the EIV requirements and reporting, along with the
timely processing of annual recertifications.
2. Implement increased monitoring and oversight mechanisms to detect and correct
compliance issues.
3. Establish clear accountability measures for not following procedures through appropriate
corrective actions.
4. Effectively communicate the importance of following procedures to all staff, emphasizing
the impact on organizational efficiency and compliance.
5. Encourage a culture of continuous improvement where procedures are regularly reviewed,
communicated with the staff and provide regular training of changing circumstances or best
practices.
Finding Resolutions Status:
Resolved
Criteria
1. Management is responsible for the design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error.
2. Management is responsible for timely submission of audited financial statements to Federal
Audit Clearinghouse ("FAC"). Submission of June 30, 2023 financial statements was not
completed within specified time frame.
Condition
1. The accounting records required numerous material adjustments to be proposed and
recorded in order for the financial statements to be fairly presented in accordance with
generally accepted accounting principles in the United States of America.
2. Single Audit reports are required to be submitted to the FAC pursuant to the audit
requirement of Title 2 U.S. Code of Federal Regulations Part 200.
Cause
Management did not have sufficient controls over financial reporting.
Effect or Potential Effect
Condition 1 may lead to inaccurate financial reporting and potential misstatement of the financial
statements such that they are not in accordance with accounting principles generally accepted in
the United States of America. Condition 2 results in auditee being designated as a not low-risk
auditee, which may have an effect on future federal grants and program eligibility.
Recommendations
1. Management should undertake a review of internal controls over financial reporting and
ensure that financial data is properly recorded in the books and records of the project to
prevent misstatements from occurring in the future.
2. Management should implement procedures to ensure that required filing is completed as
required.
Auditor Noncompliance Code:
S. Internal control deficiencies.
View of Responsible Officials
1. Management agrees with the finding and recommendation and has implemented reviews of
the financial statements by senior management prior to closing books to ensure accuracy
of information.
2. Management agrees with the finding and recommendation and will ensure required filing is
completed timely.
Finding Resolution Status:
Resolved
Criteria
1. Management is responsible for the design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error.
2. Management is responsible for timely submission of audited financial statements to Federal
Audit Clearinghouse ("FAC"). Submission of June 30, 2023 financial statements was not
completed within specified time frame.
Condition
1. The accounting records required numerous material adjustments to be proposed and
recorded in order for the financial statements to be fairly presented in accordance with
generally accepted accounting principles in the United States of America.
2. Single Audit reports are required to be submitted to the FAC pursuant to the audit
requirement of Title 2 U.S. Code of Federal Regulations Part 200.
Cause
Management did not have sufficient controls over financial reporting.
Effect or Potential Effect
Condition 1 may lead to inaccurate financial reporting and potential misstatement of the financial
statements such that they are not in accordance with accounting principles generally accepted in
the United States of America. Condition 2 results in auditee being designated as a not low-risk
auditee, which may have an effect on future federal grants and program eligibility.
Recommendations
1. Management should undertake a review of internal controls over financial reporting and
ensure that financial data is properly recorded in the books and records of the project to
prevent misstatements from occurring in the future.
2. Management should implement procedures to ensure that required filing is completed as
required.
Auditor Noncompliance Code:
S. Internal control deficiencies.
View of Responsible Officials
1. Management agrees with the finding and recommendation and has implemented reviews of
the financial statements by senior management prior to closing books to ensure accuracy
of information.
2. Management agrees with the finding and recommendation and will ensure required filing is
completed timely.
Finding Resolution Status:
Resolved
Criteria
Loans are not permitted to be made from project cash without prior authorization from HUD.
Condition
During the year ended July 30, 2024, the Project transferred funds in the amount of $12,812 to an
affiliate from project cash without HUD approval. The funds have since been transferred back.
Cause
Procedures were not in place to ensure that cash disbursements of project funds were limited to
project operating costs.
Effect or Potential Effect
The payments of $12,812 were unauthorized loans and therefore considered to be questioned
costs.
Questioned Costs
$12,812
Identification as a Repeat Finding
This is not a repeat finding.
Recommendations
Management should establish procedures to ensure payments of this nature are not made in the
future.
Auditor Noncompliance Code:
G. Unauthorized loans from project assets.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for funding. Funds have been transferred and will maintain HUD policy of no unauthorized loans
between affiliates.
Finding Resolutions Status:
Resolved
Criteria
Loans are not permitted to be made from project cash without prior authorization from HUD.
Condition
During the year ended July 30, 2024, the Project transferred funds in the amount of $12,812 to an
affiliate from project cash without HUD approval. The funds have since been transferred back.
Cause
Procedures were not in place to ensure that cash disbursements of project funds were limited to
project operating costs.
Effect or Potential Effect
The payments of $12,812 were unauthorized loans and therefore considered to be questioned
costs.
Questioned Costs
$12,812
Identification as a Repeat Finding
This is not a repeat finding.
Recommendations
Management should establish procedures to ensure payments of this nature are not made in the
future.
Auditor Noncompliance Code:
G. Unauthorized loans from project assets.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for funding. Funds have been transferred and will maintain HUD policy of no unauthorized loans
between affiliates.
Finding Resolutions Status:
Resolved
Criteria
During the year ended June 30, 2024, the project did not make the required monthly deposits to the
replacement reserve. A catch-up deposit was made for 6 months of at once, however the deposit
was short by $13,378.
Condition
The regulatory agreement requires that the project make monthly deposits.
Cause
The project did make the required monthly deposits during the initial management company
change.
Effect or Potential Effect
Failure to make monthly payments resulted in an underfunding of the replacement reserve and a
violation of the regulatory agreement.
Questioned Costs
$13,378
Identification as a Repeat Finding
This is not a repeat finding.
Recommendations
Management should ensure that the replacement reserve is funded in accordance with the terms of
the regulatory agreement.
Auditor Noncompliance Code:
N. Reserve for replacement deposits.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for replacement reserve funding. Funds have been transferred and will maintain HUD policy of
monthly deposits to the replacement reserve.
Finding Resolution Status:
Resolved
Criteria
During the year ended June 30, 2024, the project did not make the required monthly deposits to the
replacement reserve. A catch-up deposit was made for 6 months of at once, however the deposit
was short by $13,378.
Condition
The regulatory agreement requires that the project make monthly deposits.
Cause
The project did make the required monthly deposits during the initial management company
change.
Effect or Potential Effect
Failure to make monthly payments resulted in an underfunding of the replacement reserve and a
violation of the regulatory agreement.
Questioned Costs
$13,378
Identification as a Repeat Finding
This is not a repeat finding.
Recommendations
Management should ensure that the replacement reserve is funded in accordance with the terms of
the regulatory agreement.
Auditor Noncompliance Code:
N. Reserve for replacement deposits.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for replacement reserve funding. Funds have been transferred and will maintain HUD policy of
monthly deposits to the replacement reserve.
Finding Resolution Status:
Resolved
Criteria
Management fee payments are limited to amounts determined in accordance with the terms of the
HUD approved management agreement.
Condition
During the year ended June 30, 2024, the project paid management fees of $4,884 in excess of the
amount approved by HUD.
Cause
There were 2 different management agreements and management did not follow the HUD
approved management agreement when paying management fees from operations.
Effect or Potential Effect
The overpaid amount is an unauthorized distribution and therefore considered to be questioned
costs.
Questioned Costs
$4,884
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
The management company should reimburse the project for overpaid management fee in the
amount of $4,884 and implement procedures to ensure that the management fee paid does not
exceed the amount determined in accordance with the HUD approved management agreement.
Auditor Noncompliance Code:
J. Unauthorized management fees
Views of Responsible Officials
Management agrees with the finding and is working with ownership on reimbursements to the
property. Management will collect in accordance with HUD going forward.
Finding Resolution Status:
In process
Criteria
Management fee payments are limited to amounts determined in accordance with the terms of the
HUD approved management agreement.
Condition
During the year ended June 30, 2024, the project paid management fees of $4,884 in excess of the
amount approved by HUD.
Cause
There were 2 different management agreements and management did not follow the HUD
approved management agreement when paying management fees from operations.
Effect or Potential Effect
The overpaid amount is an unauthorized distribution and therefore considered to be questioned
costs.
Questioned Costs
$4,884
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
The management company should reimburse the project for overpaid management fee in the
amount of $4,884 and implement procedures to ensure that the management fee paid does not
exceed the amount determined in accordance with the HUD approved management agreement.
Auditor Noncompliance Code:
J. Unauthorized management fees
Views of Responsible Officials
Management agrees with the finding and is working with ownership on reimbursements to the
property. Management will collect in accordance with HUD going forward.
Finding Resolution Status:
In process
Criteria
Tenant lease files are required to be maintained and tenant eligibility determined in accordance with
HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs.
Condition
In connection with our lease file review, we noted the following deficiencies:
- 2 out of 6 lease files for existing tenants did not follow EIV guidelines, EIV reports were generated
outside of the allowed 120-day period.
- 2 out of 6 lease files for existing tenants did not contain necessary documentation, files were
missing gross rent change forms and latest executed versions of HUD-50059 form.
- 2 out of 6 lease files for existing tenants were not certified before required recertification date, one
file was 60 days late, second file was 116 days late.
- 1 out of 2 lease files for former tenants had late security deposit refund.
Cause
Management's policies with respect to the determination of eligibility and the maintenance of tenant
lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs were not consistently followed.
Effect or Potential Effect
The procedures for eligibility and maintaining tenant lease files were not consistently applied in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent
subsidies paid by HUD.
Recommendations
Management should establish procedures and monitor compliance with those procedures to ensure
that tenant eligibility is correctly determined and that tenant lease files are properly maintained in
accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs.
Auditor Noncompliance Code:
Z. Other.
View of Responsible Officials
Management agrees with the finding. Management’s plan of action for non-compliance of the HUD
Guidelines includes the immediate steps below:
1. Provide additional training and resources to ensure that the staff has a clear understanding
of HUD requirements that will include the importance of adhering to procedures and
guidelines with a specific focus on the EIV requirements and reporting, along with the
timely processing of annual recertifications.
2. Implement increased monitoring and oversight mechanisms to detect and correct
compliance issues.
3. Establish clear accountability measures for not following procedures through appropriate
corrective actions.
4. Effectively communicate the importance of following procedures to all staff, emphasizing
the impact on organizational efficiency and compliance.
5. Encourage a culture of continuous improvement where procedures are regularly reviewed,
communicated with the staff and provide regular training of changing circumstances or best
practices.
Finding Resolutions Status:
Resolved
Criteria
Tenant lease files are required to be maintained and tenant eligibility determined in accordance with
HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs.
Condition
In connection with our lease file review, we noted the following deficiencies:
- 2 out of 6 lease files for existing tenants did not follow EIV guidelines, EIV reports were generated
outside of the allowed 120-day period.
- 2 out of 6 lease files for existing tenants did not contain necessary documentation, files were
missing gross rent change forms and latest executed versions of HUD-50059 form.
- 2 out of 6 lease files for existing tenants were not certified before required recertification date, one
file was 60 days late, second file was 116 days late.
- 1 out of 2 lease files for former tenants had late security deposit refund.
Cause
Management's policies with respect to the determination of eligibility and the maintenance of tenant
lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs were not consistently followed.
Effect or Potential Effect
The procedures for eligibility and maintaining tenant lease files were not consistently applied in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent
subsidies paid by HUD.
Recommendations
Management should establish procedures and monitor compliance with those procedures to ensure
that tenant eligibility is correctly determined and that tenant lease files are properly maintained in
accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs.
Auditor Noncompliance Code:
Z. Other.
View of Responsible Officials
Management agrees with the finding. Management’s plan of action for non-compliance of the HUD
Guidelines includes the immediate steps below:
1. Provide additional training and resources to ensure that the staff has a clear understanding
of HUD requirements that will include the importance of adhering to procedures and
guidelines with a specific focus on the EIV requirements and reporting, along with the
timely processing of annual recertifications.
2. Implement increased monitoring and oversight mechanisms to detect and correct
compliance issues.
3. Establish clear accountability measures for not following procedures through appropriate
corrective actions.
4. Effectively communicate the importance of following procedures to all staff, emphasizing
the impact on organizational efficiency and compliance.
5. Encourage a culture of continuous improvement where procedures are regularly reviewed,
communicated with the staff and provide regular training of changing circumstances or best
practices.
Finding Resolutions Status:
Resolved
Criteria
1. Management is responsible for the design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error.
2. Management is responsible for timely submission of audited financial statements to Federal
Audit Clearinghouse ("FAC"). Submission of June 30, 2023 financial statements was not
completed within specified time frame.
Condition
1. The accounting records required numerous material adjustments to be proposed and
recorded in order for the financial statements to be fairly presented in accordance with
generally accepted accounting principles in the United States of America.
2. Single Audit reports are required to be submitted to the FAC pursuant to the audit
requirement of Title 2 U.S. Code of Federal Regulations Part 200.
Cause
Management did not have sufficient controls over financial reporting.
Effect or Potential Effect
Condition 1 may lead to inaccurate financial reporting and potential misstatement of the financial
statements such that they are not in accordance with accounting principles generally accepted in
the United States of America. Condition 2 results in auditee being designated as a not low-risk
auditee, which may have an effect on future federal grants and program eligibility.
Recommendations
1. Management should undertake a review of internal controls over financial reporting and
ensure that financial data is properly recorded in the books and records of the project to
prevent misstatements from occurring in the future.
2. Management should implement procedures to ensure that required filing is completed as
required.
Auditor Noncompliance Code:
S. Internal control deficiencies.
View of Responsible Officials
1. Management agrees with the finding and recommendation and has implemented reviews of
the financial statements by senior management prior to closing books to ensure accuracy
of information.
2. Management agrees with the finding and recommendation and will ensure required filing is
completed timely.
Finding Resolution Status:
Resolved
Criteria
1. Management is responsible for the design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error.
2. Management is responsible for timely submission of audited financial statements to Federal
Audit Clearinghouse ("FAC"). Submission of June 30, 2023 financial statements was not
completed within specified time frame.
Condition
1. The accounting records required numerous material adjustments to be proposed and
recorded in order for the financial statements to be fairly presented in accordance with
generally accepted accounting principles in the United States of America.
2. Single Audit reports are required to be submitted to the FAC pursuant to the audit
requirement of Title 2 U.S. Code of Federal Regulations Part 200.
Cause
Management did not have sufficient controls over financial reporting.
Effect or Potential Effect
Condition 1 may lead to inaccurate financial reporting and potential misstatement of the financial
statements such that they are not in accordance with accounting principles generally accepted in
the United States of America. Condition 2 results in auditee being designated as a not low-risk
auditee, which may have an effect on future federal grants and program eligibility.
Recommendations
1. Management should undertake a review of internal controls over financial reporting and
ensure that financial data is properly recorded in the books and records of the project to
prevent misstatements from occurring in the future.
2. Management should implement procedures to ensure that required filing is completed as
required.
Auditor Noncompliance Code:
S. Internal control deficiencies.
View of Responsible Officials
1. Management agrees with the finding and recommendation and has implemented reviews of
the financial statements by senior management prior to closing books to ensure accuracy
of information.
2. Management agrees with the finding and recommendation and will ensure required filing is
completed timely.
Finding Resolution Status:
Resolved
Criteria
Loans are not permitted to be made from project cash without prior authorization from HUD.
Condition
During the year ended July 30, 2024, the Project transferred funds in the amount of $12,812 to an
affiliate from project cash without HUD approval. The funds have since been transferred back.
Cause
Procedures were not in place to ensure that cash disbursements of project funds were limited to
project operating costs.
Effect or Potential Effect
The payments of $12,812 were unauthorized loans and therefore considered to be questioned
costs.
Questioned Costs
$12,812
Identification as a Repeat Finding
This is not a repeat finding.
Recommendations
Management should establish procedures to ensure payments of this nature are not made in the
future.
Auditor Noncompliance Code:
G. Unauthorized loans from project assets.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for funding. Funds have been transferred and will maintain HUD policy of no unauthorized loans
between affiliates.
Finding Resolutions Status:
Resolved
Criteria
Loans are not permitted to be made from project cash without prior authorization from HUD.
Condition
During the year ended July 30, 2024, the Project transferred funds in the amount of $12,812 to an
affiliate from project cash without HUD approval. The funds have since been transferred back.
Cause
Procedures were not in place to ensure that cash disbursements of project funds were limited to
project operating costs.
Effect or Potential Effect
The payments of $12,812 were unauthorized loans and therefore considered to be questioned
costs.
Questioned Costs
$12,812
Identification as a Repeat Finding
This is not a repeat finding.
Recommendations
Management should establish procedures to ensure payments of this nature are not made in the
future.
Auditor Noncompliance Code:
G. Unauthorized loans from project assets.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for funding. Funds have been transferred and will maintain HUD policy of no unauthorized loans
between affiliates.
Finding Resolutions Status:
Resolved
Criteria
During the year ended June 30, 2024, the project did not make the required monthly deposits to the
replacement reserve. A catch-up deposit was made for 6 months of at once, however the deposit
was short by $13,378.
Condition
The regulatory agreement requires that the project make monthly deposits.
Cause
The project did make the required monthly deposits during the initial management company
change.
Effect or Potential Effect
Failure to make monthly payments resulted in an underfunding of the replacement reserve and a
violation of the regulatory agreement.
Questioned Costs
$13,378
Identification as a Repeat Finding
This is not a repeat finding.
Recommendations
Management should ensure that the replacement reserve is funded in accordance with the terms of
the regulatory agreement.
Auditor Noncompliance Code:
N. Reserve for replacement deposits.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for replacement reserve funding. Funds have been transferred and will maintain HUD policy of
monthly deposits to the replacement reserve.
Finding Resolution Status:
Resolved
Criteria
During the year ended June 30, 2024, the project did not make the required monthly deposits to the
replacement reserve. A catch-up deposit was made for 6 months of at once, however the deposit
was short by $13,378.
Condition
The regulatory agreement requires that the project make monthly deposits.
Cause
The project did make the required monthly deposits during the initial management company
change.
Effect or Potential Effect
Failure to make monthly payments resulted in an underfunding of the replacement reserve and a
violation of the regulatory agreement.
Questioned Costs
$13,378
Identification as a Repeat Finding
This is not a repeat finding.
Recommendations
Management should ensure that the replacement reserve is funded in accordance with the terms of
the regulatory agreement.
Auditor Noncompliance Code:
N. Reserve for replacement deposits.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for replacement reserve funding. Funds have been transferred and will maintain HUD policy of
monthly deposits to the replacement reserve.
Finding Resolution Status:
Resolved
Criteria
Management fee payments are limited to amounts determined in accordance with the terms of the
HUD approved management agreement.
Condition
During the year ended June 30, 2024, the project paid management fees of $4,884 in excess of the
amount approved by HUD.
Cause
There were 2 different management agreements and management did not follow the HUD
approved management agreement when paying management fees from operations.
Effect or Potential Effect
The overpaid amount is an unauthorized distribution and therefore considered to be questioned
costs.
Questioned Costs
$4,884
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
The management company should reimburse the project for overpaid management fee in the
amount of $4,884 and implement procedures to ensure that the management fee paid does not
exceed the amount determined in accordance with the HUD approved management agreement.
Auditor Noncompliance Code:
J. Unauthorized management fees
Views of Responsible Officials
Management agrees with the finding and is working with ownership on reimbursements to the
property. Management will collect in accordance with HUD going forward.
Finding Resolution Status:
In process
Criteria
Management fee payments are limited to amounts determined in accordance with the terms of the
HUD approved management agreement.
Condition
During the year ended June 30, 2024, the project paid management fees of $4,884 in excess of the
amount approved by HUD.
Cause
There were 2 different management agreements and management did not follow the HUD
approved management agreement when paying management fees from operations.
Effect or Potential Effect
The overpaid amount is an unauthorized distribution and therefore considered to be questioned
costs.
Questioned Costs
$4,884
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
The management company should reimburse the project for overpaid management fee in the
amount of $4,884 and implement procedures to ensure that the management fee paid does not
exceed the amount determined in accordance with the HUD approved management agreement.
Auditor Noncompliance Code:
J. Unauthorized management fees
Views of Responsible Officials
Management agrees with the finding and is working with ownership on reimbursements to the
property. Management will collect in accordance with HUD going forward.
Finding Resolution Status:
In process