Finding Text
Criteria
In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, loans are not permitted to be made from project cash without prior authorization from HUD.
Condition
During the year ended December 31, 2023, the project paid payroll expenses in the amount of
$76 on behalf of an affiliate from project cash without HUD approval. The amount due to the project as of December 31, 2023 is $76.
Cause
Procedures were not in place to ensure that cash disbursements of projects funds were limited to project operating costs.
Effect or Potential Effect
The payment of $76 is an unauthorized loan and therefore considered to be questioned costs.
Questioned Costs
$76
Context
During 2023, the project paid payroll expenses for an affiliated entity from project cash account resulting in a receivable in the amount of $76.
Identification as a Repeat Finding
This is a repeat finding (see prior year finding number 2022-002).
Recommendation
Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future.
Auditor Noncompliance Code: G - Unauthorized loans from project assets.
Finding Resolution Status: In process.
Views of Responsible Officials
The finding for the $76 includes items deducted from Shiloh Manor due to an error with the setup of payroll processing with Paychex, which resulted in a few items deducted from the bank account that should have been for First Housing Corp. It was eventually corrected with Paychex in 2024 and the amount was accounted for as accounts receivable - other as a due from First Housing Corp. A transfer will be made in 2024 for the total balance due of $76 from First Housing Corp. to Shiloh Manor to correct the error.
Department of Housing and Urban Development