Finding Text
Criteria
Loans are not permitted to be made from project cash without prior authorization from HUD.
Condition
During the year ended June 30, 2024, the Project paid expenses in the amount of $39,106 on
behalf of an affiliate from project cash without HUD approval. The amount due to the Project as
of June 30, 2024 is $39,106.
Cause
Procedures were not in place to ensure that cash disbursements of project funds were limited to
project operating costs.
Effect or Potential Effect
Use of project funds for unauthorized loans may result in shortage of cash and default on
projects own obligations.
Questioned Costs
The payments of $39,106 were unauthorized loans and therefore considered to be questioned
costs.
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
The affiliated project should immediately reimburse the amount due to the Project and establish
procedures to ensure payments of this nature are not made in the future.
Auditor Noncompliance Code: G. Unauthorized loans from project funds
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD
requirement for loans. Funds have been transferred and will maintain HUD policy of no
unauthorized loans between affiliates.
Finding Resolution Status: Resolved.