Finding 397062 (2023-001)

Title and CFDA Number of Federal Program: Section 202 Capital Advance CFDA # 14.181 Type of Finding: Federal Award Finding Finding Resolution Status: Unresolved Criteria: The Project is not permitted to withdraw funds from the Replacement Reserve Account without the prior authorization from their HUD representative. Statement of Condition: The Project’s manager withdrew funds that were not approved by HUD using the HUD-9250 Funds Authorization from the Replacement Reserve worksheet. Cause: The Project’s management did not have the funds available to pay contractors for work performed on the property. Management did not submit Form 9250 requesting authorization to withdraw the funds. Effect or Potential Effect: The Project’s Replacement Reserve Account is underfunded by $26,138 from 2023 unauthorized withdrawals. Reporting Views of Responsible Officials: The Project’s management should redeposit the funds into the Replacement Reserve account as soon as possible, to bring the account to the correct balance. Recommendation: The Project’s management should redeposit the funds into the Replacement Reserve account as soon as possible, to bring the account to the correct balance. Auditor’s Summary of the Auditee’s Comments on the Finding Recommendations: The Project’s management withdrew funds without receiving authorization to withdraw funds from the Replacement Reserve account. Funds should only be withdrawn from the Replacement Reserve account after the HUD-9250 “Funds Authorization” form is signed by the HUD Representative. Response Indicator: Agree Completion Date: 06/27/2023 Response: The Project’s management will fully redeposit the funds into the Replacement Reserve account in 2023 and will not withdraw funds in the future without proper authorization.