Finding Text
Finding 2025-001: Reportable Finding Considered a Significant Deficiency - Activities Allowed and Unallowed Program name: HOME Investment Partnership Program Assistance Listing: 14.239 Federal award Identification number: Unknown Federal award year: 2025 Federal awarding agency: U.S. Department of Housing and Urban Development (HUD) Criteria: The HUD Regulatory Agreement does not allow the use of project funds to pay subordinate debt without the prior approval and consent of HUD. Statement of Condition: During the period ended September 30, 2025, the Company made payments from project funds for subordinate debt without the prior approval of HUD in the amount of $53,739. Cause: A management oversight use of project funds caused the amount to be paid without prior approval and consent of HUD. Effect or Potential Effect: The payment on subordinate debt resulted in an unauthorized distribution of operating funds. Amount of Questioned Costs: $ 53,739 Perspective: Funds from the project account were used to make payments on subordinate debt without prior approval and consent of HUD. Recommendation: We recommend that management implement controls to prevent the unauthorized distribution of project funds. Management's response and corrective action plan (unaudited): Management at Satellite Affordable Housing Associates Property Management (“SAHA PM”) is in agreement with the finding and intends to follow the requirements of the HUD Regulatory Agreement in the future. Management has reimbursed the property $28,539, an amount equal to HCD’s net cash flow payment from FY 2024. Management will seek HUD approval on form HUD-9250 for use of project funds that paid the $12,600 for FY 2025 and FY 2024.