Finding Text
Criteria
Loans are not permitted to be made from project cash without prior authorization from HUD.
Condition
During the year ended June 30, 2024, the Project paid payroll expense in the amount of $9,303 on
behalf of an affiliate from project cash without HUD approval. The amount due to the Project as of
June 30, 2024, is $9,303.
Cause
Procedures were not in place to ensure that cash disbursements of project funds were limited to
project operating costs.
Effect or Potential Effect
Use of project funds for unauthorized loans may result in shortage of cash and default on projects'
own obligations.
Questioned Costs
The payments of $9,303 were unauthorized loans and therefore considered to be questioned costs.
Identification as a Repeat Finding
This finding is not a repeat finding.
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
Views of Responsible Officials
Management agrees with the finding and will ensure payroll is allocated correctly going forward.
Finding Resolution Status: Unresolved