Finding Text
Condition:
The Project failed to deposit the current year’s required surplus cash into its residual receipts account within
90 days of year-end. Additionally, the Project underfunded its residual receipts account by failing to deposit
the total current year’s surplus cash amount.
Criteria:
The Company is required to follow HUD’s guidelines and procedures for depositing the total current year
surplus cash into a residual receipts account within 90 days after the end of the fiscal period.
Cause:
Internal controls at the Company are not properly designed to ensure timely deposit of surplus cash amounts.
Effect:
The Company was not in compliance with their Regulatory Agreement.
Context:
During our recalculation of management’s computation of surplus cash, we noted the residual receipts deposit
was based on a preliminary calculation which resulted in the residual receipts account being underfunded by
$587,045.
Recommendation:
The Company should design their internal controls to ensure the calculation of surplus cash is performed
timely, to ensure that they will comply with HUD guidelines, as stated above.
Reporting Views of Responsible Officials:
Management has acknowledged a breach in protocol and deposited the current year’s surplus cash on August
9, 2022 and July 22, 2024.
Prior Year Finding:
Yes