Finding 500173 (2023-002)

Material Weakness
Requirement
H
Questioned Costs
$1
Year
2023
Accepted
2024-09-30

AI Summary

  • Unauthorized Payments: The Company made $144,097 in payments to related parties without proper authorization.
  • Compliance Issue: This action violates federal program requirements regarding surplus cash deposits.
  • Next Steps: Management needs to implement controls to monitor cash and ensure unauthorized payments are returned.

Finding Text

Finding No. 2023-2 Statement of Condition During 2023, the Company made unauthorized payments to related parties in the amount of $144,097. Criteria The Company must make required surplus cash deposits to the residual receipts reserve prior to making payments on related party payables. Questioned Costs $144,097 Effect or potential effect The Company is in non-compliance with specific requirements of a major federal program. Cause Controls and actions were not taken to ensure that surplus cash is deposited to the residual receipts reserve prior to making payments on related party payables. Recommendation Management should establish internal controls and procedures to ensure that surplus cash is properly monitored and disbursed. The unauthorized payments should be returned to the Company. Reporting views of responsible officials Auditee agrees with the auditor and management will be responsible for accounting for this in the future. Management will ensure that the unauthorized payments will be returned to the Company. Auditor Noncompliance Code: H – Unauthorized distributions of project assets

Corrective Action Plan

Finding Reference Number: 2023-2 Recommendation Management should establish internal controls and procedures to ensure that surplus cash is properly monitored and disbursed. Reporting views of responsible officials Auditee concurs with this finding. Auditee agrees with auditor recommendations. Completion date or proposed completion date: December 31, 2024 Action(s) taken or planned on the finding Management agrees with the recommendation of the auditor and internal controls are being put in place to ensure that surplus cash is deposited into the residual receipts reserve prior to paying down intercompany balances.

Categories

Questioned Costs Cash Management HUD Housing Programs Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 500172 2023-001
    Material Weakness Repeat
  • 500174 2023-001
    Material Weakness Repeat
  • 500175 2023-002
    Material Weakness
  • 1076614 2023-001
    Material Weakness Repeat
  • 1076615 2023-002
    Material Weakness
  • 1076616 2023-001
    Material Weakness Repeat
  • 1076617 2023-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $1.06M