Finding Text
Criteria
Residual receipts reserve deposits should be made within 90 days of year end and excess
residual receipts are required to be remitted to HUD upon receipt of HUD approval.
Condition
During the year ended June 30, 2024, management did not make the required residual receipts
reserve deposit in the amount of $35,468 within 90 days of year end, as required by HUD.
Additionally, once funded to the residual receipts reserve, since the deposit would have
exceeded the residual receipts maximum, management should have requested approval from
HUD to remit the excess residual receipts funds back to HUD.
Lastly, the $2,791 that was remitted to HUD for the June 30, 2022 residual receipt payment due,
was paid from the operating account when it should have been paid from the residual receipts
account. Management should reimburse the operating account from the residual receipts
account.
Cause
Controls were not in place to ensure that residual receipts funds were timely deposited and
remitted, if applicable.
Effect or Potential Effect
The Organization is not in compliance with the requirements of the regulatory agreement and of
the Consolidated Appropriations Act of 2016, governing Residual Receipts for PRAC program.
Questioned Costs
$35,468
Identification as a Repeat Finding
This is a repeat finding.
Recommendation
Management should establish internal controls and procedures to ensure that excess residual
receipts reserve funds are remitted timely.
Auditor Noncompliance Code: B. Failure to make required residual receipts deposits.
Views of Responsible Officials
Management agrees with the finding and has done the following:
- Transferred $2,791 to the residual receipts account from the operating account.
- Transferred $35,468 to the residual receipts account from the operating account.
- We will ensure transfers are completed going forward and management will work with HUD
to get approval to release the funds from the residual receipts account and remit them to
HUD, as necessary.
Finding Resolution Status: In process.