Finding Text
2024 – 002 Unauthorized Loan of Project Funds
ALN Numbers Name of Federal Program: 14.181 HUD - Section 811, Supportive Housing for Disabled Persons
Identification as a Repeat Finding: This finding is not a repeat finding from 2023
Finding: Funds were improperly disbursed.
Criteria: HUD program requirements prohibit using project funds to make operating advances or loans to other entities without the approval of HUD.
Condition and context: During 2024, the property manager processed a check payment which paid for a service provided to a related party property from the account of Northwest Estates 811. This error was not detected or corrected by year end.
Cause: Property manager made an error in coding one payment made during the year, and the error was not detected or corrected by year end.
Sample size and population: Population is the number of check disbursements during the year, totaling 179. Sample size selected was 40 check disbursements.
Effect: As a result of this error, an unauthorized advance was made to a separate entity, against the applicable HUD program requirements. This advance has been recorded as receivable on the December 31, 2024 financial statements as accounts receivable from related party.
Recommendation: We recommend the Partnership implement policies and procedures to monitor the coding of transactions and prevent unauthorized advances.
Questioned Costs: $3,368
Management Response and Corrective Action Plan: See corrective action plan on page 49.
Contact Person: Tom Anderson