Finding Text
Finding No. 2024-001 – Unauthorized use of project funds for unrelated costs
Federal Assistance Listing Number Name of Federal Program or Cluster
14.181 Supporting Housing for Persons With Disabilities
FHA/Contract Number 000-HD020-WPD Questioned Costs $6,170
Information on the Universe Population Size
Operating cash was reviewed throughout the audit period and at year-end.
Sample Size Information
Operating cash was reviewed throughout the audit period and at year-end.
Identification of Repeat Finding Reference Number
None noted
Criteria
The regulatory agreement requires that project funds are used for related costs.
Statement of Condition
Due to a fraudulent transaction by an unknown perpetrator, unauthorized funds were withdrawn from the operating cash account and misappropriated.
Cause
The unknown and unrelated perpetrator created three fraudulent checks that they were able to cash at the bank from the Entity’s operating account.
Effect or Potential Effect
An unauthorized withdrawal of $6,170 was withdrawn from the operating cash account for unrelated project costs.
Auditor Non-Compliance Code
Z – Other
Questioned Costs
$6,170
Section III – Federal Award Findings and Questioned Costs (continued)
Perspective
Although the perpetrator of the fraud did not have access to the Entity’s check stock, the perpetrator was able to create fraudulent checks and was able to withdraw cash from the Entity’s bank account. The bank is disputing their obligation to reimburse the Entity for the fraudulent checks.
Recommendations
We recommend that the Entity pursue reimbursement from the Maryland Banking Commission and discuss potential solutions with their HUD representative.
Views of Responsible Officials
See corrective action plan
Contact Person
Cathy Voundy-Thomas