Finding Text
Unauthorized Change in Management Agent and Unauthorized Distribution
Federal Agency Program Title Assistance Listing Number Award Number Award Period
All awards reported on the schedule of expenditures of federal awards
Identification as a Repeat Finding: N/A
Finding:
The Organization’s management agent is not approved by HUD. Management fees paid to unauthorized
management agents are considered unauthorized distributions of project funds.
Criteria:
HUD requires that a management agent assumes management responsibility only after HUD approval.
Condition and context:
During 2023, the Organization hired and transitioned the operational management to a management agent
which is not approved by HUD.
Cause:
During 2023, the Organization hired and transitioned the operational management to a management agent
which is not approved by HUD. The management agent charged the Organization $55,269 for
management fees for the year ended December 31, 2023.
Sample size and population:
Sampling was not applicable to this finding.
Effect:
Noncompliance with the HUD requirements could reduce access to future funding from Federal sources.
Recommendation:
The Organization should immediately require the management agent to complete the HUD approval
process, and if necessary, consider the need to change management agents to one that is HUD approved.
Question Costs: $55,269 of management fees incurred during 2023
Views of Management and Corrective Action Plan:
Management’s response is reported in the “Corrective Action Plan”
Contact Person: Mauro Hernandez