Finding Text
Finding 2023-002 - U.S. Department of Housing and Urban Development, Mortgage Insurance Rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate, ALN #14.135 Statement of Condition: During the year ended December 31, 2023, supporting documentation was not available for some requested disbursements. Criteria: The HUD Handbook 4370.2 REV-1, Chapter 2 Section 12 states a request for a check must have supporting documentation (i.e., invoice itemizing amount requested with an authorized signature) in order for approval to be obtained to make the disbursement. Checks must be approved by an individual authorized to approve checks. Effect: Noncompliance with HUD regulations. Cause: Prior management oversight. Context: A sample of forty cash disbursements totaling $163,790 were tested to determine if the cash disbursements were in accordance with HUD Handbook 4370.2. Of the forty cash disbursements, twenty-five cash disbursements, totaling $71,782, tested did not have supporting documentation or included late fees, therefore were unable to be tested for compliance with HUD Handbook 4370.2 and deemed noncompliant. By extrapolating our identified error rate on cash disbursements tested that were noncompliant (43.83%) over the total population of cash disbursements for the year ended December 31, 2023 of $924,768, $405,288 of cash disbursements could be noncompliant based on the above error rate. Questioned Costs: $405,288 Recommendation: We recommend that management ensure supporting documentation is maintained for all disbursements from project operations. Views of Responsible Officials and Corrective Action Plan: Management acknowledges the requested disbursements did not have supporting documentation available. The Corporation has executed a new management agreement with Remnant Management Inc. effective October 1, 2024. Remnant Management Inc. will ensure supporting documentation is maintained for all disbursements from project operations beginning October 1, 2024 and going forward.