Finding Text
Finding 2024-001 Unauthorized loan of Project funds. Type of finding:
Significant deficiency in internal control. Condition and context:
The Organization was owed $3,072 at December 31, 2024 for overpaying a related party. Criteria:
The Organization’s regulatory agreement does not allow it to loan funds to other entities. Cause:
The Organization has several transactions with its related party during the year and management inadvertently overpaid an invoice. Effect:
The Organization loaned funds to a related party without approval from HUD. Questioned costs:
Known questioned costs are $3,072. Recommendation:
We recommend that the Organization updates its policy for related party transactions and limits them to only paying for transactions that have occurred. Views of Responsible Officials:
Management agrees with this finding and the overpayment will be corrected. Management will review internal controls and implement a review process to only pay expenses already incurred to avoid future overpayments.