Finding Text
Finding No. 2024-4; Section 8, Assistance Listing 14.195 Criteria Management fee payments are limited to amounts determined in accordance with terms of the management agreement. Condition During the year ended December 31, 2024, the project paid management fees of $7,864 in excess of the amount approved by HUD. Cause Lack of management oversight caused management fees to be overpaid during the current year. Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Questioned Costs $7,864 Recommendation The management company should reimburse the project for overpaid management fee in the amount of $7,864 and implement procedures to ensure that the management fee paid does not exceed the amount determined in accordance with the management agreement. Auditor Noncompliance Code J - Unauthorized management fees Finding Resolution Status Management discovered the issue and reimbursed the project in 2025. Reporting Views of Responsible Officials We agree that management fees were miscalculated. The Managing Agent caught the error on the management fees and reimbursed the cooperative. The management fees have been automated in July of 2025 to ensure accuracy.