Finding Text
Criteria: All disbursements from the residual receipts account must be approved by HUD (24 CFR section 891.400(e)). Condition: During 2023, the management company without approval from HUD withdrew $474,005 from the residual receipts account. Funds were used by the management company for purposes unrelated to the Project. Remaining $474,005 is included in accounts receivable, other. Questioned Costs: $474,005 Cause: Management company failed to comply with the residual receipts disbursement requirement. Effect: The unauthorized withdrawal of funds from the residual receipts account by the management company resulted in the Project not to be in full compliance with its Regulatory Agreement. Recommendation: Management should enhance its internal controls to ensure management company’s compliance with residual receipts account.