Finding Text
Finding No. 2023-2
Statement of Condition
During 2023, the Company made unauthorized payments to related parties in the amount of $144,097.
Criteria
The Company must make required surplus cash deposits to the residual receipts reserve prior to making payments on related party payables.
Questioned Costs
$144,097
Effect or potential effect
The Company is in non-compliance with specific requirements of a major federal program.
Cause
Controls and actions were not taken to ensure that surplus cash is deposited to the residual receipts reserve prior to making payments on related party payables.
Recommendation
Management should establish internal controls and procedures to ensure that surplus cash is properly monitored and disbursed. The unauthorized payments should be returned to the Company.
Reporting views of responsible officials
Auditee agrees with the auditor and management will be responsible for accounting for this in the future. Management will ensure that the unauthorized payments will be returned to the Company.
Auditor Noncompliance Code: H – Unauthorized distributions of project assets