Finding 1169309 (2025-002)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2025

Accepted

2026-01-16

Audit: 382256

Organization: Hands Metro Apartments, Inc. (PA)

Auditor: MCGILL POWER BELL & ASSOCIATES LLP

AI Summary

Core Issue: A property improperly paid for another project's insurance audit, violating HUD regulations.
Impacted Requirements: Funds must only be used for the specific property's operations, with unauthorized distributions needing HUD approval.
Recommended Follow-Up: Management should establish procedures for verifying payment details to ensure correct account postings before processing payments.

Finding Text

2025-02 – Supportive Housing for Disabled Persons ALN 14.181 Statement of Condition: During the audit, we noted that another property paid one month of HANDS Triad Housing, Inc.'s insurance audit escrow. Criteria: Per HUD Handbook 4370.1, project funds must be used solely for purposes related to the operation of the specific multifamily property . Loans or advances from a project to another project, related business, or individual are considered unauthorized distributions of project assets, unless approved by HUD. Effect of Condition: This is a violation of the HUD Regulations. Questioned Costs: $3,372 Cause of Condition: There was insufficient review or verification of payment details before processing. Recommendation: We recommend that management implement procedures to ensure payments are posted to the correct property accounts. This should include verification of account selection prior to payment processing. Response: See Corrective Action Plan.

Corrective Action Plan

B. Comment on Findings and Recommendations We concur with the auditor's finding that HANDS Metro's funds were used to fund the HANDS Triad Housing insurance audit escrow. We had a new employee and they made a mistake and it was not found until the assistant controller reviewed the ledgers 2 weeks later (which happened to be past year end). This was not an intentional transaction to use a different properties funds to put into an escrow account, it was a mistake. The funds have since been transferred back to HANDS Metro. C. Actions Taken or Planned The Assistant Controller and Property Accountant will review all funds were paid from the correct account before the transfer is completed in the bank account.

Other Findings in this Audit

1169308 2025-001

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
14.181	SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES	$1.14M
14.182	LOWER INCOME HOUSING ASSISTANCE PROGRAM_SECTION 8 NEW CONSTRUCTION/SUBSTANTIAL REHABILITATION	$147,463