Finding Text
Finding 2024-001: Special Tests and Provisions – Project Funds
Information on the Federal Program: U.S. Housing of Urban Development (HUD) – 14.181 Supportive Housing for Persons with Disabilities; FAIN #034HD110; July 1, 2023 – June 30, 2024
Finding Type: Significant Deficiency
Criteria: In accordance with 24 CFR 891.400(e), a separate interest-bearing project fund account shall be maintained in a depository or depositories which are members of the Federal Deposit Insurance Corporation or National Credit Union Share Insurance Fund and all tenant payments, charges, income and revenues arising from project operation or ownership shall be deposited to this account.
Condition and Context: During our testing, we noted that the project fund account used by the Project was not an interest-bearing account
Cause: Subsequent to the initial rental assistance contract, changes to HUD regulations resulted in the requirement that the project fund account be an interest-bearing account. This change was an oversight by the Project’s
management.
Effect or Potential Effect: Project funds would not earn interest in accordance with HUD requirements.
Questioned Costs: None
Recommendation: We recommend that the Project utilize an interest-bearing account for project funds in accordance with HUD requirements.
Management’s Response: Although the Project does not currently use an interest-bearing account for project funs, due to the ongoing operation of the program and continuous activity within the project funds account, any
interest earned in such an account would be negligible. Management is in the process of evaluating this recommendation to determine the appropriate course of action.
Planned Implementation Date of Corrective Action: February 2025
Person Responsible for Corrective Action: Chief Financial Officer