Finding Text
Finding No. 2024-002- Unauthorized loans from project assets Criteria The terms of the regulatory agreement/HAP contract require payments/repayments of related party fees/loans to be limited to available surplus cash computed on a semi-annual or annual basis unless approved by HUD. Condition During the year ended December 31, 2024, the project paid expenses in the amount of $83,761 on behalf of an affiliate from project cash without HUD approval. Cause Procedures were not in place to ensure that distributions of cash were limited to available surplus cash computed in accordance with HUD regulations. Effect or Potential Effect The payments/repayments of $83,761 were unauthorized distributions and therefore considered to be questioned costs. Questioned Costs $83,761 Identification as a Repeat Finding N/A Recommendations Management should implement procedures to limit distributions of project cash to the annual surplus cash calculation amount required by the regulatory agreement/HAP contract. Management should immediately reimburse the project's cash account for the unauthorized distribution. HUD Auditor Noncompliance Code G- Unauthorized loans from project assets Uniform Guidance Auditor Noncompliance Code B- Allowable Costs/Cost Principles Finding Resolution Status: Resolved. Reporting Views of Responsible Officials The Corporation agrees with the finding and the auditor's recommendations have been adopted. As of the report date and subsequent to the statement of financial position date, the $83,761 was repaid back to the Corporation.