Finding 1079088 (2023-002)

Significant Deficiency
Requirement
B
Questioned Costs
$1
Year
2023
Accepted
2024-10-14
Audit: 324633
Auditor: Fogel Klein LLP

AI Summary

  • Core Issue: The Project improperly disbursed $47,837 for legal costs that were not considered operating expenses.
  • Impacted Requirements: This violates the Regulatory Agreement, which limits cash withdrawals to reasonable operating and maintenance expenses.
  • Recommended Follow-Up: Ensure future legal expenses related to property sales are paid from non-project accounts to prevent similar issues.

Finding Text

Finding 2023-002: Federal Awards Major Program Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 207/223(f)) (CFDA# 14.155): Significant Deficiency Allowable costs/cost principles Finding Resolution Status: Resolved Questioned Costs: $47,837 Information on Universe and Population Size: Not Applicable Sample Size Information: Not Applicable Noncompliance Information: The Project disbursed $47,837 of legal costs that were not operating expenses for the project. Statement of Condition: The Project disbursed $47,837 of legal costs that were not operating expenses for the project. Criteria: The Regulatory Agreement (HUD-92466 version 11/2002, section 13(g)) restricts withdrawal of cash of the Project to payments for reasonable expenses incident to the operation and maintenance of the project. Cause: The Project paid legal fees pertaining to the sale that were billed to the Project prior to the sale and release from the Regulatory Agreement. Effect or Potential Effect: The Project disbursed $47,837 of legal costs that were not operating expenses for the project. Auditor Non-Compliance Code: Z - Other Recommendations: The Project should ensure that expenses pertaining to the sale of the property should be paid from entity non-project accounts. Reporting Views of Responsible Officials: Management concurs with this finding and the current management agent has ensured that $47,837 was reimbursed from entity non-project funds. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: Management concured and has ensured that $47,837 was reimbursed from entity non-project funds. Completion Date: February 8, 2024 Response: Management concurs with this finding and the current management agent has ensured that $47,837 was reimbursed from entity non-project funds. Actions Taken or Planned on the Finding: The funds were reimbursed from entity non-project funds. Contact Person: Moshe Eichler

Categories

Questioned Costs Allowable Costs / Cost Principles HUD Housing Programs Procurement, Suspension & Debarment Reporting Significant Deficiency

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $2.12M
14.195 Project-Based Rental Assistance (pbra) $539,360
14.191 Multifamily Housing Service Coordinators $36,387