Finding Text
Criteria: Under the regulatory agreement with HUD, the Project is required to ensure that funds are only used for the purpose of necessary expenditures of the property and operating the project. Condition: During our testing of disbursements, it was noted there was no evidence of review or approval for 53 of 60 disbursements. Additionally, two out of the 60 disbursements, totaling $169, did not have a supporting invoice and we were unable to determine if the expenditures were appropriate and necessary expenditures for the Project. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 60 transactions out of 314 total transactions were selected for disbursement testing, which accounted for $59,887 of $340,478 of project disbursements for the year ended June 30, 2022. Cause: Management oversight and a lack of segregation of duties. Effect: The Project was not in compliance with HUD requirements as it relates to controls over the use of project funds. Repeat Finding from Prior Year(s): Yes, prior year finding 2021-003. Recommendation: We recommend the Project follow its internal control process and document review of invoices before they are paid to ensure they are in fact expenses related to the Project. Views of Responsible Officials: Management agrees with the finding.