FAC Explorer

Finding 393080 (2023-001)

Significant Deficiency
Requirement
N
Questioned Costs
$1
Year
2023
Accepted
2024-04-12
Audit: 303421
Organization: Neider House Project No. 124-Ee023 (ID)
Auditor: Magnuson McHugh Dougherty CPAS

AI Summary

  • Core Issue: Financial statements must be materially accurate; however, we found unapproved transactions in the Residual Receipts account.
  • Impacted Requirements: Compliance with HUD regulations is at risk due to unauthorized fund transfers, potentially affecting Section 202 status.
  • Recommended Follow-Up: Ensure no funds from the Residual Receipts account are used without HUD approval, and implement corrective actions as agreed.

Finding Text

Criteria: There is an expectation that the financial statements will be materially accurate when an auditor begins their final fieldwork on the audit after year-end. Minor adjustments are expected but overall, the balances should materially reflect the financial position of the entity. Condition: During our fieldwork, we found activity within the Residual Receipts account without HUD Approvals. Cause: Client transferring funds to operating account, and then redepositing amounts at a later date. Effect: Client is not in compliance due to not having HUD approval for transactions within the Residual Receipts account. This could jeopardize their Section 202 status with HUD. Recommendation: It is our recommendation that the Project does not utilize funds within the Residual Receipts account without HUD approval, as this is required per the Compliance Supplement. Views of the Responsible Officials and Planned Corrective Actions: We understand the recommendations above and will take corrective action to implement the changes needed to ensure that funds are not utilized without HUD approval.

Corrective Action Plan

During the audit of the 2023 financials, it was noted as a finding that a transfer was done from Residual Receipts to the Operating Account without HUD approval. This was to pay for the repairs done before the REAC inspection; the Residual Receipts Account was reimburse as soon as we received the approval to transfer the funds from the Reserve account. There was no authorization from HUD for the transfer (Residual Receipts to Operating) but there is approval from HUD for Reserve to Operating. In the future, this will not be done unless we have approval from HUD to do the transfer.

Categories

Questioned Costs HUD Housing Programs Cash Management

Other Findings in this Audit

  • 393081 2023-001
    Significant Deficiency
  • 969522 2023-001
    Significant Deficiency
  • 969523 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $4.87M