Finding 522250 (2024-001)

Department of Housing and Urban Development Finding No. 2024-001; Section 811 Capital Advance - Supportive Housing for Persons with Disabilities Criteria Any withdrawal from the residual receipts reserve requires HUD approval. Condition During the year ended June 30, 2024, management withdrew $8,409 from the residual receipts reserve without HUD approval. Cause The amount was withdrawn from the residual receipts reserve in error. Effect or Potential Effect The withdrawal of $8,409 is an unauthorized withdrawal from the residual receipts reserve. Questioned Costs Questioned costs totaled $8,409, comprising the withdrawal from the residual receipts reserve. Context In connection with the procedures applied to test compliance with reserve requirements, there was one instance where management withdrew $8,409 from the residual receipts reserve without HUD approval. Identification as a Repeat Finding Not a repeat finding. Recommendation Management should immediately deposit $8,409 into the residual receipts reserve. Auditor Noncompliance Code: C - Unauthorized withdrawal from residual receipts accounts. Finding Resolution Status: Unresolved. The Project intends to reimburse the residual receipts reserve via ACH in the amount of $8,409. Views of Responsible Officials Management concurs that the Project withdrew from the residual receipts reserve in the amount of $8,409 without HUD approval. Management further notes that they have re-trained staff, reaffirmed the review and approval process to ensure required residual receipt reserve withdrawals are completed with proper HUD authorization. Management has made changes to internal controls to prevent and detect unauthorized withdrawals from reserves. Management will complete the reimbursement to the residual receipts reserve subsequent to year-end.