Finding Text
Agency: U.S. Department of Housing and Urban Development (HUD)
Assistance Listing Number: 14.181
Program: Supportive Housing for Persons with Disabilities
Criteria: Uniform Guidance states that controls should be implemented to ensure the Project is in
compliance with special tests and provisions. As stated in the Coronavirus Disease 2019 memorandum released by HUD, remittance of residual receipts were suspended through
December 31, 2021. Residual receipts were due to HUD by the next Project Rental Assistance Contracts renewal which was October 1, 2022.
Condition: Management did not remit payment to HUD for the amount in excess of $250 per unit for their fifteen units.
Cause: Management was aware the funds needed to be remitted back to HUD in the time frame noted however management has had ongoing communication with HUD over the past year in an effort to keep the funds and therefore have not yet been remitted.
Effect: The project was not in compliance with the HUD requirement to remit the excess residual receipts within the required time frame.
Questioned Costs: The amount of questioned costs is $37,058.
Context: The Project is allowed to retain $250 per unit per HUD guidance. With 15 units this amounts to $3,750. The residual receipts balance at June 30, 2024 is $40,808 which results in questioned costs of $37,058.
Recommendation: We recommend management review their processes and controls surrounding residual receipts to ensure amounts due to HUD are properly remitted.
Management's Response: In December of 2023, management had a meeting with with HUD to discuss using the residual receipts funds to benefit the Project. At the meeting, HUD agreed to allow the funds to be used as a loan to the operating account until subsidy payments for the Project resumed at which point the funds were to be transferred back to the residual receipts account. The next step that was agreed on was to transfer the funds to the reserve for replacement to be used for necessary repairs and upgrades to the Project. All steps were followed and the transfer request to move the funds to the reserve for replacement was made in May 2024 with no response from HUD. Subsequent follow up was made however management has not received either approval or denial on the transfer request. Currently, the funds remain in the residual receipts account pending approval to transfer the funds to the reserve for replacement as agreed upon in the December meeting with HUD.
This finding is a repeat finding of 2023-002.