Finding Text
Finding No. 2024-001: Restricted Cash (Material Weakness)
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Title: Supportive Housing for Persons with Disabilities (Section 811)
Federal Assistance Listing Number: 14.181
Compliance Requirement: Special Tests and Provisions
Statement of condition
The residual receipts reserve was commingled with operating cash at June 30, 2024.
Criteria
The Regulatory Agreement requires that the residual receipts reserve be retained in a separate, segregated account in the name of the entity until released as approved by HUD.
Cause
Review procedures were insufficient to ensure the residual receipts were transferred into a separate, segregated account, resulting in the residual receipts reserve being commingled with operating cash at June 30, 2024.
Effect
Residual receipts reserve funds could be used to fund operations or for alternative purposes without HUD's authorization.
Recommendation
Management should revisit its internal controls and procedures to ensure the residual receipts reserve is transferred and maintained in a separate, segregated account in the name of the entity.
Identification of repeat finding
The finding is a repeat of Finding No. 2023-001.
Auditor non-compliance code
D - Commingling of funds
Questioned costs
None
Finding resolution status
In process