Finding 1208423 (2025-006)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2025

Accepted

2026-04-22

Audit: 399381

Organization: Jude's Place Apartments, Inc. (KY)

Auditor: DEMING MALONE LIVESAY & OSTROFF PSC

AI Summary

Issue: The Organization withdrew funds from the reserve for replacements that exceeded HUD's approved amount.
Trend: Errors occurred due to phone requests for bank transfers, leading to discrepancies in withdrawal amounts.
Recommendation: Review and improve controls to ensure compliance with HUD approvals, and return excess funds to the reserve.

Finding Text

Criteria: The Organization is required to receive written approval from HUD prior to withdrawing any funds from the reserve for replacements. Statement of Condition: The Organization withdrew an amount from the reserve for replacements that did not agree to the amount approved by HUD. Cause of condition: The Organization requests all internal bank transfers by phone. An error was made in making the transfer and the amount withdrawn did not agree to the approved amount. Effect of condition: Funds withdrawn from the reserve for replacement by the Organization exceeded the amount approved by HUD. Recommendation: The design of the current controls should be reviewed to ensure that all withdrawals from the reserve for replacement agree to the amount approved by HUD. The Organization should return the excess funds withdrawn and lost interest to the reserve. Views of Responsible Officials: Management agrees with the finding and will implement procedures to ensure that all withdrawals from the reserve for replacement agree to the amount approved by HUD. The excess funds withdrawn will be returned to the reserve.

Corrective Action Plan

Recommendation: The design of the current controls should be reviewed to ensure that all withdrawals from the reserve for replacement agree to the amount approved by HUD. The Organization should return the excess funds withdrawn to the reserve. Action Taken: The management of Jude’s Place Apartments, Inc. accepts the recommendation of Deming, Malone, Livesay & Ostroff and, accordingly, management will implement procedures to ensure that all withdrawals from the reserve for replacement agree to the amount approved by HUD. The excess funds withdrawn were returned to the reserve in May 2025.

Other Findings in this Audit

1208419 2025-002

Material Weakness Repeat
1208420 2025-003

Material Weakness Repeat
1208421 2025-004

Material Weakness Repeat
1208422 2025-005

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
14.181	SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES	$982,206