Finding Text
Finding 2025-002 – Special Tests and Provisions U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria: Any withdrawal from the replacement reserve account requires HUD approval. Condition: During the year ended September 30, 2025, management withdrew $21,146 from the replacement reserve account without HUD approval. Cause: The amount was withdrawn from the replacement reserve account in error. Effect or Potential Effect: The withdrawal of $21,146 is an unauthorized withdrawal from the replacement reserve account. Questioned costs: $21,146 Context: During the year ended September 30, 2025, the Project did not provide documentation demonstrating HUD approval for a $21,146 withdrawal from the replacement reserve account. This unapproved withdrawal constitutes a violation of the Project's regulatory agreement. The staff member responsible for managing this process was on leave from beginning of January 2025 through beginning of March 2025. Identification as a Repeat Finding: No Recommendation: Management should immediately deposit $21,146 into the replacement reserve account or obtain evidence of HUD approval. Auditor Noncompliance Code: A - Unauthorized withdrawals from replacement reserve account Finding Resolution status: In process Reporting Views of Responsible Officials: Management acknowledges that two replacement reserve withdrawals dated February 14, 2025 were processed prior to obtaining HUD's written approval. This occurred due to a temporary lapse in oversight during a staff absence.