Finding Text
Finding No. 2022-003: Cash Disbursements (Material Weakness) Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2022, management disbursed funds of $20,695 to a related party in excess of amounts allowed by the Regulatory Agreement. Criteria The Regulatory Agreement prohibits the distribution of cash or assets other than as approved by HUD. Cause Review procedures were insufficient to ensure that the amounts disbursed to related parties were within the amounts allowed per the Regulatory Agreement. Effect The Organization could have insufficient funds to operate the project and the surplus cash computation, which determines the repayment of a note payable, could be inaccurate without the restoration of the funds to the operating cash held by the Organization. Recommendation Management should revisit and enhance its internal control and review procedures regarding relatedparty payment calculations to ensure funds are not over-disbursed in the future. Management should also ensure the funds are returned to the Organization. Identification of repeat finding The finding is not a repeat finding. Auditor non-compliance code H - Unauthorized distribution of project assets Questioned costs None Finding resolution status Remediated subsequent to year end. Reporting views of responsible officials and planned corrective actions Management has put in place controls and procedures to ensure that funds are not over-disbursed in the future. Management has returned the funds to the HUD entity.