Audit 400188

Condition: The Project has receivables, totaling $26,714, from related parties at year end. Criteria: The Project may only distribute funds to affiliates up to the amount required for management fees, as reimbursement for payroll, benefits, and operating expenses, or from allowable distributions of surplus cash taken only after the semiannual or annual surplus cash calculations. Amounts in excess are unauthorized distributions. Cause: Management oversight. Effect: The Project is in violation of its regulatory agreement. Recommendation: The Project should request the affiliates repay the amounts due and ensure payments to affiliates are only for management fees, as reimbursement for payroll, benefits, and operating expenses, or from allowable distributions of surplus cash taken only after the semiannual or annual surplus cash calculations. View of Responsible Officials: Management is aware of the related party receivable and reconciles these balances to be reimbursed timely. The Project will request repayment from the affiliates and will continue to monitor related party activity to ensure the Project does not pay reimbursements or advances to affiliates in excess of allowed expenditures or allowable distributions of surplus cash.