Finding 1096143 (2024-001)

Finding Reference Number: 2024-001 Title and CFDA Number of Federal Program: 14.155 Project Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects Type of Finding Federal Award Finding Finding Resolution Status: Resolved Information on Universe Population Size: N/A Sample Size Information: N/A Identification of Repeat Finding and Finding Reference: N/A Criteria: Compliance with the Regulatory Agreement requires disbursements from the Critical Repairs Reserve be made for the purpose of offsetting specific costs of critical repairs at the project upon consent of HUD. Statement of Condition: The Corporation requested and received distributions from the Critical Repairs Reserve account for duplicate invoices. The total of the duplicate invoices was $55,517, which was reduced by retainage withheld, resulting in distributions for duplicate invoices totaling $49,965. Cause: Management oversight. Effect or Potential Effect: Distributions of Critical Repairs Reserve funds for unallowable costs results in the Corporation beingnoncompliant with the Regulatory Agreement. Auditor Non-Compliance Code: H - Unauthorized distributions of project assets Questioned Costs: $49,965 Context: During the year ended April 30, 2024, the property had withdrawals from the Critical Repairs Reserve. Recommendation: The amount owed to the contractor for the critical repairs work completed at the project should be reduced by the amount of the overpayment to the contractor due to payment of duplicate invoices. Going forward, Management should review invoices included in the Critical Repairs Reserve withdrawal requests to ensure they are accurate and not duplicates.