Finding Text
HUD insured mortgage program Section 223(f), ALN 14.155 Criteria: Per HUD regulatory agreements and HUD Handbook 4370.2, owners/agents must compute surplus cash within 90 days after fiscal year-end and remit the full required deposit into the residual receipts account by the due date. Statement of Condition: The Project remitted $26,882 of the prior year required $51,323 surplus cash deposit by the December 29, 2024 HUD deadline. However, the remaining $24,441 of surplus cash was not deposited until October 14, 2025. Cause: Management indicated that the partial late deposit occurred because the annual audit had not been completed in time to finalize the surplus cash calculation. The audit was not able to be completed by the HUD filing deadline due to the Organization’s difficulty completing year-end closing of the books and locating occupancy records requested by the auditor. Effect: Failure to deposit the full amount of surplus cash by the required deadline constitutes noncompliance with HUD regulations. Untimely deposits reduce HUD’s ability to ensure that residual receipts are available for authorized project purposes in accordance with program requirements. Recommendation: We recommend that management establish controls to ensure full and timely surplus cash deposits, including procedures for making provisional calculations or estimated deposits if the audit is delayed, and ensuring that audits are completed in time to support timely compliance. Views of Responsible Officials: We agree with the auditor’s finding. We understand the audits need to be completed timely to know the correct surplus cash amount to be deposited in a timely manner. Until we can get to that point, we will make provisional calculations to estimate this amount, if any, so it can be deposited in a timely manner.