Finding 203 (2023-002)

Program: U.S. Department of Housing and Urban Development Supportive Housing for Persons with Disabilities (Section 811). Federal Assistance Listing Number 14.181. Criteria or specific requirement: In accordance with the HUD memorandum for Section 811 Project Rental Assistance Contract (“PRAC”) properties, the Organization shall establish a residual receipts account to house any surplus funds at the end of the fiscal year. Any balance greater than $250 per unit in a residual receipts account must be remitted to HUD’s Accounting Center upon “termination” of the PRAC. Termination is defined as expiration of the contract term, which for most PRACs falls on the annual contract anniversary date. Condition: The Organization had excess funds over $250 remaining in the residual receipts account which have not been remitted to HUD upon PRAC termination. Effect: The Organization has not remitted any funds to HUD at the time of the PRAC termination, therefore, it is in violation of the HUD regulatory agreement. Cause: The Organization’s understanding was that payments of excess residual receipts balances were to be made once requested from HUD. Recommendation: We recommend that the organization remit excess residual receipts funds to the HUD Accounting Center upon PRAC termination to remain in compliance. Views of responsible officials (and planning corrective actions): Management agrees with the recommendations provided. See Corrective Action Plan.