Finding Text
Finding No. - 2025-002 - Federal Assistance Listing Number 14.181 - Supportive Housing for Persons with Disabilities (Section 811) Type of Finding – Federal Award Finding Finding Resolution Status – Resolved Criteria – Project funds must be used for the operation of the project (including required insurance coverage) and to make required deposits to the replacement reserve and residual receipts account. Statement of Condition – During the year ended June 30, 2024, the Project was advanced $4,000 from the organizing sponsor to be used to pay operating expenses of the Project. The advance is payable in four installments of $1,000. The Project made the remaining two of the four installment repayments to the organizing sponsor during the year ended June 30, 2025. The third installment repayment was made without HUD approval in advance. Cause – Such advance was necessary as the Project experienced a cash flow shortage during the year. However, it was an oversight of management that the repayments were made without HUD approval in advance. Effect or Potential Effect – The Project was not in compliance with the terms of the Regulatory Agreement with HUD. Auditor Non-Compliance Code – H – Unauthorized distribution of project assets. Questioned Costs – $1,000 Reporting Views of Responsible Officials – Management agrees with the finding and is implementing procedures to correct this which is further discussed in the Correction Action Plan. Recommendation – Management should ensure that any distributions of project assets are approved by HUD in advance. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations – We agree with auditee’s response. Response Indicator – Agree Completion Date – March 26, 2025 Response – Management will ensure that any distributions of project assets are approved by HUD in advance.