Finding Text
Finding 2025-004 – 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: Loans are not permitted to be made from project cash without prior authorization from HUD. Statement of Condition: During the year ended September 30, 2025, shared costs paid on behalf of an adjacent property were not reimbursed by the other property in a timely manner. In addition, a related receivable of $783 from the other property has remained outstanding for an extended period. Cause: Procedures were not in place to ensure company policy was followed with respect to timely reimbursement for shared costs and related receivables. Effect or Potential Effect: The payments of $8,785 and related receivable of $783 were unauthorized loans and therefore considered to be questioned costs. Questioned Costs: $9,568 Context: During the year ended September 30, 2025, shared costs paid on behalf of an adjacent property, were not reimbursed on a quarterly basis in accordance with company policy. In addition, the related receivable balance remains outstanding. Identification as a Repeat Finding: No Recommendation: Management should immediately reimburse the amount due to the project and establish procedures to ensure reimbursement for shared costs and related receivables are made timely in accordance with established policy. Auditor Noncompliance Code: G – Unauthorized Loans of Project Assets Finding Resolution status: In process Reporting Views of Responsible Officials: Management stated they were unaware of HUD's expectation for consistent reimbursement; however, HUD requires shared costs to be reimbursed on a regular basis, with monthly or quarterly reimbursement most observed. Management noted they will follow this going forward.