Finding 2025-001 Return of Excess Residual Receipts Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Supportive Housing for the Elderly (CFDA No. 14.157) Criteria: Per HUD regulations, any excess balance greater than $250 per unit in the Residual Receipts account must be remitted to HUD's accounting center upon termination of the PRAC. Condition: During the course of our audit, we noted that the Project did not return excess residual receipts funds in excess of $250 per unit to HUD upon expiration of the Section 202 PRAC contract which ended on October 31, 2024. The Project is allowed to keep $3,750 based on its fifteen units. The balance of the account on October 31, 2024, was $3,784. Cause: Management is maintaining a calculation to show excess balances in its Residual Receipts bank account along with its calculation of surplus cash. However, the return was not made due to an oversight. There is no second review in place to detect and correct such oversights. Effect: Noncompliance with HUD requirements can lead to adverse consequences with future funding. Recommendation: We recommend that management review the excess of the Residual Receipts account regularly and return the proper amount of the excess to HUD by the required due date. The Project should enhance its operational and fiscal policies regarding HUD requirements to require a second review of all compliance requirements to ensure adherence with each item. Checklists can be maintained to show these requirements were met and reviewed by management.