Finding Text
Condition - Management withdrew $42,926 of funds to purchase a vehicle from the reserve for replacements account with HUD approval, however, management subsequently acquired a loan to finance the vehicle purchase and used the reserve funds for other purposes.
Criteria - Funds withdrawn from the reserve for replacements account are to be used for the purpose disclosed on the Funds Authorization form and loans taken out requires HUD approval.
Effect - The Company was not in compliance with the above criteria.
Cause - Funds withdrawn were not used for their intended purpose and management did not receive HUD’s approval for the vehicle loan.
Statistical Sampling - The sample was not intended to be, and was not, a statistically valid sample.
Recommendation - We recommend that the $42,926 of funds withdrawn be used to pay off the loan or to be returned to the reserve for replacement account.
Management’s Reply - Management will use the $42,926 of funds withdrawn from the reserves for replacements to payoff the loan acquired for the vehicle as originally intended.