Finding 519479 (2024-002)

Criteria: Disbursements totaling not in excess of 20% of the total balance in the general operating reserve as of the close of the preceding annual period may be made by the Cooperative without the approval of HUD. Any disbursements in excess of this amount may be made only following the approval of HUD. Condition: Funds were withdrawn in excess of 20% of the total balance as of the close of the preceding annual period without HUD approval. Questioned Costs: None. Context: The Cooperative has informed us that in the future no withdrawals in excess of 20% of the total balance as of the close of the preceding annual period will be made without first receiving approval from HUD. Effect: The Cooperative is out of compliance with their HUD regulatory agreement. Cause: The Cooperative did not receive approval from HUD before withdrawing funds over 20% of the total balance in the general operating reserve as of the close of the preceding annual period. Repeat Finding: N/A. Recommendation: We recommnd that the Cooperative receive approval from HUD before withdrawing funds from the general operating reserve in excess of 20% of the total balance as of the close of the preceding annual period. Current Status: Resolved. The excess funds have been replaced and the Cooperative will seek HUD approval in the future. Action Taken: The Cooperative will first receive approval from HUD before withdrawing funds over 20% of the total balance in the general operating reserve as of the close of the preceding annual period. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the corrective action plan on page 28 in this audit report.