Finding Text
Finding 2023-001 Unauthorized loan of Project funds. Type of finding:
Significant deficiency in internal control. Condition and context:
The Organization was owed $12,895 at December 31, 2023 for overpaying a related party.Criteria:
The Organization’s regulatory agreement does not allow it to loan funds to other entities. Cause:
The Organization has several transactions with its related party during the year and management inadvertently overpaid an invoice.Effect:
The Organization loaned funds to a related party without approval from HUD.Questioned costs:
Known questioned costs are $12,895.
Recommendation:
We recommend that the Organization updates its policy for related party transactions and limits them to only paying for transactions that have occurred.Views of Responsible Officials:
Management agrees with this finding and the overpayment was corrected in March 2024. Management will review internal controls and implement a review process to only pay expenses already incurred to avoid future overpayments.