Finding Text
Finding 2024-003: Unauthorized loans from project assets
Statement of Condition
During the procedures applied to a sample of 25 cash disbursements, we noted one instance of noncompliance with HUD regulations regarding use of project assets. Based on the results of sampling, during the year ended June 30, 2024, the project paid expenses in the amount of $515 on behalf of an affiliate from project cash without HUD approval for expenses improperly coded to the project.
Criteria
Loans are not permitted to be made from project cash without prior authorization from HUD.
Effect
The payments of $515 were unauthorized loans and therefore considered to be questioned costs.
Cause
Procedures were not in place to ensure that cash disbursements of project funds were limited to project operating costs.
Questioned Costs
$515.
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
G – Unauthorized loans from project assets
View of Responsible Officials
Management concurs with the finding and will review internal control policies to ensure cash disbursements of project funds are limited to project operating costs. Expense paid from project funds will be reimbursed to the project.