Finding 544701 (2024-001)

Finding 2024-001: An unauthorized withdrawal of $2,000 was transferred from the reserve for replacement to the operating cash account on November 25, 2024. Criteria: Disbursements from the reserve for replacement fund may be made only after written consent is received from HUD. Condition: There was a delay in the project receiving the HAP payment from HUD. The property needed the funds to pay for operations. The amount transferred from the reserve for replacement to the operating cash account was transferred back to the reserve on December 2, 2024. Cause: Oversight in management’s procedures for requesting withdrawals from the reserve for replacement. Effect: An unauthorized withdrawal was transferred from the reserve for replacement to the operating cash account. Recommendation: We recommend management request and receive written approval from HUD using form HUD-9250. Questioned Costs: $2,000 View of Responsible Officials: The funds were withdrawn from the account due to the delay in the project receiving the HAP payment. The project had a rent increase effective September 1, 2024 of which they are still waiting to receive rents owed from HUD. Management has received email approval for borrowing money from the reserve in 2025.