Finding 481312 (2024-001)

Schedule reference number 2024-001 Title and AL Number of Federal Program: Home Improvement Partnership Grant (AL 14.239) Type of finding: Federal Award Resolution Status: In process. Population size: N/A Sample size: N/A Repeat finding: No. Criteria: The regulatory agreement stipulates that all withdrawals exceeding $2,500 from the Reserve for Replacement Account need prior written consent of the lender. Statement of Condition: A withdrawal of $37,000 for emergency improvements was made from the Reserve for Replacement account without prior approval from the lender. Cause: Management tried to get approval for the withdrawal from HUD, not realizing that the new regulatory agreement required them to get approval from the lender. Effect or Potential Effect: The Project is not in conformity with the terms of the regulatory agreement. Auditor Non-Compliance Code: N. Questioned costs: N/A. Reporting views of responsible officials: Management thought the approval was to be requested from HUD, as had been the case with the earlier regulatory agreement. Contract Number: 114-44098. Context: The error was noticed at the time of performing the audit. Recommendation: Management should obtain prior consent from lender for all withdrawals from the Reserve for Replacement exceeding $2,500. Auditors' summary of auditee's comment: They are in agreement. Proposed completion date: July 1, 2024. Response: Management agrees with the finding and on July 1, 2024, has obtained retroactive approval from the lender for the withdrawal of $37,000.