Audit 400478

Criteria: HUD guidelines require cash to be maintained in financial institutions, which meet minimum Government National Mortgage Association (GNMA) ratings, when balances exceed federal insurance limits. Condition: The Organization maintains cash balances in excess of federally insured limits in a financial institution that does not meet HUD guidelines. Questioned Costs: None. Context: The cash balance at December 31, 2025 was approximately $1,400,000, held in two financial institutions, one of which had an approximate balance of $1,200,000, which exceeded federal insurance limits by approximately $950,000. Effect: No negative effect was discovered during the audit. Cause: The Organization's cash balances held at two financial institutions exceed the federal insurance limits. Repeat Finding: Yes, prior year finding 2024-001. Recommendation: The Organization should transfer all funds to a financial institution that meets HUD guidelines.

deposit any excess surplus cash into a residual receipts account within 90 days after the end of the annual or semi-annual fiscal period for which surplus cash is calculated. Condition: The Organization had surplus cash as of June 30, 2021 which it had not deposited into a residual receipts account by September 2021. Questioned Costs: None. Context: The surplus cash balance was $2,111,922 at June 30, 2021. At this time, the Organization also had owner advances due in the amount of $1,660,755. Effect: No negative effect was discovered during the audit. Cause: The Organization has not deposited June 30, 2021 surplus cash into a residual receipts account. Repeat Finding: Yes, prior year finding 2024-002. Recommendation: Per the terms of the Project's borrower regulatory agreement with HUD, management should request HUD approval to pay back owner advances of $1,660,755 prior to depositing remaining surplus cash. Management should then deposit the remaining amount of surplus cash resulting from the June 30, 2021 calculation into the residual receipts account as soon as possible and monitor surplus cash closely during each annual and semi-annual period.