Finding Text
Finding reference number: 2025-001 Assistance Listing (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing No. 14.157, 122-EE166-WAH-NP and 2002 Auditor non-compliance code: H – Unauthorized distribution of project assets Finding resolution status: Unresolved Universe population size: The universe population size is not applicable to this finding Sample size information: The sample size information is not applicable to this finding Statistically valid sample: N/A Name of Federal agency: U.S. Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $6,950 Statement of condition 2025-001: The Corporation paid entity costs of $6,950 from operating cash. Criteria: The Corporation shall not without the written approval of HUD disburse or payout any funds except for operation of the Property as provided in the Regulatory and Capital Advance Agreements. Effect: The Corporation is not in compliance with terms of the Regulatory and Capital Advance Agreements and the Property's operating account is underfunded by $6,950. This amount is included on computation of surplus cash, distributions, and residual receipts so not to understate the deposit due to the residual receipts account. Cause: Management paid debt issuance costs in anticipation of an anticipated refinancing. Recommendation: The Sponsor should reimburse the Corporation $6,950 or management should request HUD approval for funds to be reimbursed from the reserve for replacement. Management's response: Management concurs with the finding and agrees with the auditor's recommendation. Management plans to request reimbursement from the reserve for replacement in 2026.