Finding Text
Finding No. 2025-002- Allowable Costs/Cost Principles - Significant Deficiency Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Section 8 Housing Assistance Payments Assistance Listing Number: 14.195 Federal Award Identification Number and Year: N/A Name of Pass-through Entity (if applicable): N/A Criteria The terms of the regulatory agreement/HAP contract require payments/repayments of related party fees/loans to be limited to available surplus cash computed on an annual basis unless approved by HUD. Condition During the year ended December 31, 2025, the project paid expenses in the amount of $12,897 on behalf of an affiliate from project cash without HUD approval. Cause Procedures were not in place to ensure that distributions of cash were limited to available surplus cash computed in accordance with HUD regulations. Effect or Potential Effect The payments/repayments of $12,897 were unauthorized distributions and therefore considered to be questioned costs. Questioned Costs $12,897 Context Costs paid on behalf of affiliate were for moving costs associated with transitioning 281 tenants to new properties. Identification as a Repeat Finding Repeat finding 2024-002 Recommendations Management should implement procedures to limit distributions of project cash to the annual surplus cash calculation amount required by the regulatory agreement/HAP contract. Management should immediately reimburse the project's cash account for the unauthorized distribution. Auditor Noncompliance Code G - Unauthorized loans from project assets Uniform Guidance Auditor Noncompliance Code B - Allowable Costs/Cost Principles Finding Resolution Status: Resolved. Views of Responsible Officials The Corporation agrees with the finding and the auditor's recommendations have been adopted. $12,747 was repaid back to the Corporation in March 2026 and $150 was repaid back in September 2026.