Finding 44375 (2022-001)

Significant Deficiency
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-02-01

AI Summary

  • Core Issue: Parkside Village made an excess cash distribution of $20,203, violating HUD guidelines for surplus cash distributions.
  • Impacted Requirements: Surplus cash distributions must follow the HUD form and calculation, allowing only semi-annual distributions based on specific limits.
  • Recommended Follow-Up: Implement a process to regularly check year-to-date distributions to ensure compliance with HUD distribution limits.

Finding Text

Finding 2022-001 HUD insured mortgage Section 223(f) Assistance # 14.155 a.Criteria- Surplus cash distributions are allowable semi-annually and are limited to the Computation of Surplus Cash, Distribution and Residual Receipts HUD form and calculation. b.Condition- Parkside Village distributed 9/30/2021 year end surplus cash of $90,943 twice instead of allowable mid-year distribution of $70,740, resulting in an excess mid-year distribution of $20,203 to the Organization instead of retaining those funds with the Project. c. Cause- A cumulative check on year-to-date distributions was not performed. d.Effect- Actual distributions exceeded allowable distributions by $20,203. e.Questioned Costs ? None exceeding $25,000. f.Perspective information- All distributions were included in the scope of procedures, thus no extrapolation was required. g. Repeat finding ? No. Questioned Costs ? None exceeding $25,000. Perspective information- All distributions were included in the scope of procedures, thus no extrapolation was required.

Corrective Action Plan

The June 2022 Surplus Cash distribution for Parkside Village was done using the using the same calculation as the December 2021 distribution and the wrong amount was distributed from Parkside Village. Once the error was discovered the excess amount of $20,203 was immediately returned to Parkside Village and the distributions are now correct. To eliminate this error in the future we have adopted a review process that requires the CFO or the Accounting Manager to review and sign off on the calculation before the funding occurs.

Categories

HUD Housing Programs Cash Management

Other Findings in this Audit

  • 620817 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $3.37M
21.000 Neighborworks America $391,500