Finding 397063 (2023-002)

Title and CFDA Number of Federal Program: Section 202 Capital Advance CFDA # 14.181 Type of Finding: Federal Awards Finding Finding Resolution Status: Resolved Criteria: The Project had unauthorized withdrawals from the Replacement Reserve account paid to a different entity. Statement of Condition: The Project’s manager withdrew funds from the Replacement Reserve account and those funds were transferred to a different entity. Cause: The Projects management withdrew $8,000 from the replacement reserve account and deposited the funds into the account of another entity Managed by the agent. Effect or Potential Effect: The Project’s Replacement Reserve Account is underfunded by $8,000. 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, and better controls will be put into place to verify and control any withdraws from properties held at the same banking institution. 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 and deposited those funds into a different entity’s bank 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 Funds should only be withdrawn from the Replacement Reserve account after the HUD-9250 “Funds Authorization” form is signed by the HUD Representative.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 make a deposit from the other entity back into the Project’s replacement reserve account as soon as possible and will put measures into place to make sure all future deposits are deposited into the correct entity.