Finding Text
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 221(d)(3) Insured Mortgage Assistance Listing Number: 14.135 Award Period: January 1, 2025 to December 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per HUD requirements, 50% of surplus cash calculated in the prior year must be deposited into a separate residual receipts account within 90 days of year end. The other 50% is applied to the HUD retrofit loan. Condition: During our testing, we noted that First Rising Mount Zion Baptist Church Housing Corporation, Inc. failed to make the 50% required deposit of surplus cash that was calculated in the 2024 audited financial statements within the 90-day time frame prescribed by HUD. Questioned costs: None. Context: Tested deposit to residual receipt account. Cause: Administrative error. Effect: The residual receipts account is not in compliance with HUD Residual Receipts Provisions and is underfunded. Repeat Finding: No Recommendation: We recommend that First Rising Mount Zion Baptist Church Housing Corporation, Inc. design and implement controls to prevent non-compliance with HUD requirements surrounding surplus cash deposits such as recalculating surplus cash at the end of the year after all transactions have been posted. Views of responsible officials: There is no disagreement with the audit finding.