Finding Text
Criteria Management fee payments are limited to amounts determined in accordance with the terms of the HUD-approved management agreement. Condition During the year ended June 30, 2025, the Project paid management fees of $6,475 in excess of the amount approved by HUD. Cause The prior management company did not apply cash received prior to June 30, 2024 to individual tenant subledgers and when the new management company made those entries during the year ended June 30, 2025, the cash receipts were inadvertently counted again as part of cash receipts when computing management fee. Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Identification as a Repeat Finding This is a repeat finding. Recommendation The management company should reimburse the Project for overpaid management fee in the amount of $6,475 and implement procedures to ensure that the management fee paid does not exceed the amount determined in accordance with the HUD-approved management agreement. Views of Responsible Officials Management agrees with the finding and is working with ownership on reimbursement to the property. Management will collect in accordance with HUD going forward. Finding Resolution Status: In process