Finding Text
Department of Housing and Urban Development Finding 2025-004 Section 223(f) Mortgage Insurance Program AL 14.155 Criteria Management fee payments are limited to amounts determined in accordance with the terms of the management agreement. Statement of Condition During the year ended September 30, 2025, the project paid management fees totaling $2,648 in excess of the amount approved by HUD in 2024, and this excess was not reimbursed. Cause Lack of management oversight with respect to residual receipts HAP offsets caused management fees to be overpaid during the current year. Effect or Potential Effect The overpaid amount is an unauthorized distribution and therefore considered to be questioned costs. Questioned costs: $2,682 Context: Management incorrectly overestimated the use of residual receipts HAP offsets, resulting in an overstatement of revenues used to calculate the management fee. Identification as a repeat finding: Yes. See 2024-004 Recommendation Management should establish additional procedures and monitor any modifications or material changes to revenues that may impact the management fee calculation. Management should pay back the overpaid management fee. Auditor Noncompliance Code: J - Unauthorized management fees Finding Resolution Status: In process Reporting Views of Responsible Officials We agree with the finding. We are reviewing our procedures to ensure we do not overpay management fees in the future.