Finding Text
Finding No. 2025-001 - Allowable Costs/Cost Principles - Significant Deficiency Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly (Section 202) Assistance Listing Number: 14.157 Federal Award Identification Number and Year: N/A Name of Pass-through Entity (if applicable): N/A Criteria Loans are not permitted to be made from Project cash without prior authorization from HUD. Condition During the year ended December 31, 2025, the Project paid expenses in the amount of $1,550 on behalf of an affiliate from Project cash without HUD approval. The amount due to the Project as of December 31, 2025 is $1,550. Cause Procedures were not followed to ensure that cash disbursements of Project funds were limited to Project operating costs. Effect or Potential Effect The payments of $1,550 were unauthorized loans and therefore considered to be questioned costs. Questioned Costs $1,550 Context Staff entered an invoice from a related party, Council Towers II Housing Develpoment Fund Corporation, into the accounts payable system, and subsequently paid that invoice. Identification as a Repeat Finding No Recommendation Management has already reimbursed the Corporation. Management should revisit the procedures in place to ensure only invoices related to the Project are entered into the Project's accounts payable system. HUD 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 and Planned Corrective Actions: Management agrees with the findings and recommendation. The payment was made in error due to an oversight into the invoice approval process. Management implemented additional controls to help ensure invoices are charged to the correct property and prevents one project from paying expenses on behalf of another project or affiliate going forward. Management will continue to monitor compliance with these procedures.