Finding 28773 (2022-001)

Material Weakness
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2022-10-30
Audit: 28847
Organization: Creative Housing Iv, Inc. (AR)
Auditor: Forvis LLP

AI Summary

  • Core Issue: The Project failed to make the required annual deposit to the residual receipts account within the 60-day timeframe after year-end.
  • Impacted Requirements: Compliance with 24 CFR 891.400(e) and 891.600(e) regarding timely deposits of surplus cash.
  • Recommended Follow-Up: Management should establish clear policies and procedures to ensure surplus cash is identified and deposited on time to avoid future compliance issues.

Finding Text

Criteria or Specific Requirement ? Special Tests and Provisions: Residual Receipts Account (24 CFR 891.400(e) and 891.600(e)) Condition ? The required annual deposit to the residual receipts account was not made. This deposit is required to be made within 60 days following year-end. Questioned Costs ? None. Context ? The Project is required to calculate surplus cash at the end of each fiscal year and any amount greater than zero is required to be deposited to a federally insured residual receipts account within 60 days of year-end. The Project properly calculated surplus cash for fiscal year 2021; however, funds were not deposited into the residual receipts account. Effect ? The Project did not comply with the residual receipts compliance requirement. Cause ? Fiscal year 2021 was the second year the Project had surplus cash that was required to be deposited to the residual receipts account and management was dependent on HUD to communicate surplus cash. Identification as a Repeat Finding ? No. Recommendation ? Management should create policies and procedures to identify and transfer surplus cash to the residual receipts account to ensure compliance with this requirement. View of Responsible Officials and Planned Corrective Actions ? Surplus cash is calculated on a monthly basis. All residual receipts are required to be deposited in a separate federally insured account within 60 days of the fiscal year-end. Written instructions are included on the surplus cash calculation spreadsheet to ensure compliance.

Corrective Action Plan

Corrective Action Plan Responsible Party: Barbara Staggs, Chief Financial Officer Finding 2022-001 The required annual deposit to the residual receipts account was not made. This deposit is required to be made within 60 days following year-end. Comments on the Finding and Recommendation Management is in agreement with this finding and the related recommendation. Action(s) Taken or Planned on the Finding Surplus cash is calculated on a monthly basis. All residual receipts are required to be deposited in a separate federally insured account within 60 days of the fiscal year-end. Written instructions are included on the surplus cash calculation spreadsheet to ensure compliance.

Categories

HUD Housing Programs Special Tests & Provisions Cash Management

Other Findings in this Audit

  • 605215 2022-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $937,300
14.195 Section 8 Housing Assistance Payments Program $80,536