Finding 11772 (2023-001)

CONDITION: Disbursements from HUD-approved withdrawal were not made for the approved purpose. CRITERIA: Disbursements from Reserve for Replacements must be for HUD-approved purposes. EFFECT: The Project is not in compliance with award requirements. CONTEXT: Audit procedures that tested withdrawals from the Reserve for Replacements revealed disbursements totaling $8,152 were not made for HUD-approved purposes. CAUSE: The original items were ordered and subsequently cancelled when not received. As a result, the Project used the funds for other purposes and had not returned the funds back to the Reserve for Replacements as of September 30, 2023. RECOMMENDATION: The Project has not had any prior compliance issues with the Reserve for Replacements. However, we recommend that the Project monitor their spending of Reserve for Replacements disbursements closely and only use the funds for HUD-approved purposes. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: Management acknowledges and agrees with the finding and the Project will deposit the unapproved monies back to the Reserve for Replacements. Management concludes that additional corrective action is not necessary and does not expect this situation to arise again in the future.