Finding Text
Condition: Based on surplus cash reported in the 2021 audit and subsequent adjustments to surplus
cash from HUD, the Project was notified that it was required to make a payment of $173,798
on the contingent mortgage. As of December 31, 2022, $173,798 had been paid through the
refinancing of the mortgage on April 26, 2022, which is 26 days after the 90-day period.
Criteria: Payment on the contingent mortgage, resulting from restricted surplus cash, is required to be
paid within 90 days of the end of the fiscal year, in accordance with the contingent mortgage
restructuring note.
Effect: The Property is out of compliance with HUD rules and regulations for Mark-to-Market.
Cause: Management failed to apply the total surplus cash to the contingent mortgage within the 90-
day period.
Recommendations: We do not have a recommendation as the surplus cash was paid with the close of
the mortgage in the refinance.
Auditee Response: We agree with the recommendation as the surplus cash was paid off.