Finding Text
Finding No. 2023-001; Unauthorized loans from project assets
Condition
During the year ended September 30, 2023, the project paid insurance expenses in the amount
of $4,247 on behalf of an affiliate from project cash without HUD approval. The amount due to
the project as of September 30, 2023 is $53,397.
Effect or Potential Effect
The payments of $53,397 were unauthorized loans and therefore considered to be questioned
costs.
Questioned Costs
$ 53,397.
Context
Loans are not permitted to be made from project cash without prior authorization from HUD.
Procedures were not in place to ensure that cash disbursements of project funds were limited to
project operating costs.
Identification as a Repeat Finding
Prior year's finding 2002-002
Recommendation
Management should immediately reimburse the amount due to the project and establish
procedures to ensure payments of this nature are not made in the future.
Auditor Noncompliance Code
B – Allowable Cost/Costs Principles
Finding Resolution Status: Resolved
Reporting Views of Responsible Officials
The Corporation agrees with the finding and the auditor's recommendations have been adopted.
As of the report date and subsequent to the statement of financial position date, the $53,397
was repaid back to the Corporation.