Core Issue: The property was charged $19,067 by a related company without obtaining necessary bids to ensure the charges were reasonable.
Impacted Requirements: HUD regulations and management agreements require arm's length contracts and reasonable charges supported by bids.
Recommended Follow-Up: The current management agent should continue efforts to obtain documentation for the charges or seek reimbursement from the prior management agent.
Finding Text
Federal program - Section 202: Criteria: HUD regulations and the management agreement state that amounts charged to the property by an Identity of Interest firm should be reasonable based on arm?s length contracts generally accomplished by obtaining bids; Condition: the property was charged $19,067 by a company owned by the prior management agent without obtaining bids to support that the charges were reasonable; Cause: the prior management agent did not obtain bids; Effect: the property may have been overcharged for the related expenses totaling $19,067; Recommendation: the current management agent should obtain the necessary documentation to support the charges paid or request the prior management agent reimburse the property. Response: The current management agent has attempted to request the supporting documentation but has been unsuccessful.
Corrective Action Plan
The current management agent has requested supporting documentation from the prior management agent but has not received documentation as of this date.