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: 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 The terms of the regulatory agreement require distributions to be limited to available surplus cash computed on a semi-annual or annual basis. Condition During the period ended December 31, 2025, the Corporation distributed $20,931 in excess of surplus cash available for distribution. Cause Procedures were not in place to ensure that distributions of cash were limited to available surplus cash in accordance with HUD regulations. Effect or Potential Effect The payments of $20,931 are unauthorized distributions and therefore considered to be questioned costs. Questioned Costs $20,931 Context The property over distributed surplus cash. Identification as a Repeat Finding No Recommendation 2025-2a Management should follow its procedures to limit distributions to the surplus cash amount calculated semi-annually and at year end. 2025-2b Management should immediately reimburse the project's cash account for the unauthorized distribution. HUD Auditor Noncompliance Code: H - Unauthorized distribution of project assets Finding Resolution Status: Resolved Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation. Procedures were not followed to ensure distributions were reviewed and limited to available surplus cash in accordance with HUD requirements. Management notes that as of December 31, 2025, there is $51,268 of available surplus cash. Had the questioned costs of $20,931 not been paid, then surplus cash would have been $72,199. Therefore, since current year surplus cash has been reduced, the questioned costs are deemed to be repaid.