Finding Text
Criteria
In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly and regulatory agreement, undocumented disbursements are not permitted to be made from project cash and shall be an ineligible project expense.
Condition
During the year ended December 31, 2023, the project paid real estate tax expenses in the amount of $9,400 from project cash while a tax abatement agreement was in effect.
Cause
City of Middletown Tax Assessor submitted real estate tax bill that was paid by management during the current year while property has an active real property tax abatement in place.
Effect or Potential Effect
The payment of $9,400 is an unauthorized distribution and therefore considered to be questioned costs.
Questioned Costs
$9,400
Context
During 2023, the project paid $9,400 of real estate tax expense while a tax abatement agreement was in effect resulting in unauthorized distribution.
Identification as a Repeat Finding
None.
Recommendation
Management should implement procedures to ensure payments of this nature are not made in the future. Management should contact City of Middletown officials to investigate the nature of the bill and request refund of funds back to project cash.
Auditor Noncompliance Code: H - Unauthorized distribution from project assets.
Finding Resolution Status: In process.
Views of Responsible Officials
Management contacted City of Middletown Tax Assessor who has agreed to reverse the bill. Management is working with the assessor to get the funds reimbursed.