Finding 528256 (2023-001)

Finding No. 2023-001; Unauthorized loans from project assets Condition During the year ended September 30, 2023, the project paid insurance expenses in the amount of $4,247 on behalf of an affiliate from project cash without HUD approval. The amount due to the project as of September 30, 2023 is $53,397. Effect or Potential Effect The payments of $53,397 were unauthorized loans and therefore considered to be questioned costs. Questioned Costs $ 53,397. Context Loans are not permitted to be made from project cash without prior authorization from HUD. Procedures were not in place to ensure that cash disbursements of project funds were limited to project operating costs. Identification as a Repeat Finding Prior year's finding 2002-002 Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code B – Allowable Cost/Costs Principles Finding Resolution Status: Resolved Reporting Views of Responsible Officials The Corporation agrees with the finding and the auditor's recommendations have been adopted. As of the report date and subsequent to the statement of financial position date, the $53,397 was repaid back to the Corporation.