Finding Text
FINDINGS – MAJOR FEDERAL AWARD PROGRAMS AUDIT
S3800-010 Finding Reference Number: 2024-003
S3800-011 Title and Assistance Number of Federal Program: 14.157 Supportive Housing for the Elderly
S3800-015 Type of Finding: Federal Program Finding (FP)
S3800-016 Finding Resolution Status: IN PROCESS
S3800-017 Information on Universe Population Size: N/A - Not detected as a result of
sampling procedures and testing.
S3800-018 Sample Size Information: N/A - Not detected as a result of
sampling procedures and testing.
S3800-019 Identification of Repeat Finding and Finding Reference Number: 2023-003
S3800-020 Criteria:
The HUD regulatory agreement requires pre-approval for all withdrawals from the residual receipts account.
S3800-030 Statement of Condition:
Management made an unauthorized withdrawal of $4,400 from the residual receipts account during the fiscal year ended June 30, 2022; the funds have not been returned to the residual receipts account.
S3800-032 Cause:
Management mistakenly withdrew funds from the residual receipts account during the year ended June 30, 2022 but did not make a deposit to replace those funds during the fiscal years ended June 30, 2023 or June 30, 2024.
S3800-033 Effect or Potential Effect:
The residual receipts account remains underfunded by $4,400.
S3800-035 Auditor Non-Compliance Code: C – Unauthorized withdrawals from residual receipts account
S3800-040 Questioned Costs: $4,400
Details – Questioned Costs by Property
S3800-037 FHA/Contract Number: 127-EE017
S3800-038 Questioned Costs: $4,400
S3800-045 Reporting Views of Responsible Officials:
The board had decided to change property management firms because of the history and severity of financial statement findings and major program fundings prior to the discovery of the unrecorded expenses. The board believes that the new management firm has a properly designed and functioning system of internal controls to prevent such future occurrences. As a result of the discovered unpaid invoices discussed in Finding 2024-001, property management will be unable to make the required residual receipts reserve deposit or pay all vendors without a rent increase from HUD. Management plans to contact the HUD Project Manager to develop a plan to get current with vendors and fund the residual receipts account. A rent increase may be necessary.
S3800-050 Context:
Management made an unauthorized withdrawal of $4,400 from the residual receipts account during the fiscal year ended June 30, 2022; the funds have not been returned to the residual receipts account leaving the account underfunded by $4,400.
S3800-080 Recommendation:
Management should deposit $4,400 into the residual receipts account to refund the unapproved withdrawals. Management should also contact the HUD Project Manager to develop a plan to get current with vendors and fund the residual receipts account. A rent increase may be necessary.
S3800-090 Auditor’s Summary of the Auditee’s Comments on the Findings and
Recommendations:
The board believes that the new management firm has a properly designed and functioning system of internal controls to prevent such future occurrences. Management plans to contact the HUD Project Manager to develop a plan to get current with vendors and fund the residual receipts account. A rent increase may be necessary.
S3800-0130 Response Indicator: Agree (A)
S3800-0140 Completion Date: February 3, 2025
S3800-0150 Response:
The board believes that the new management firm has a properly designed and functioning system of internal controls to prevent such future occurrences. Management plans to contact the HUD Project Manager to develop a plan to get current with vendors and fund the residual receipts account. A rent increase may be necessary.