Finding Text
Department of Housing and Urban Development
Finding No. 2024-001; Section 8, Assistance Listing 14.195
Criteria
Loans are not permitted to be made from project cash without prior authorization from HUD.
Condition
During the year ended December 31, 2024, the project paid expenses in the amount of $14,215 on
behalf of an affiliate from project cash without HUD approval. The amount due to the project as of
December 31, 2024 is $14,215.
Cause
Procedures were not in place to ensure that cash disbursements of project funds were limited to
project operating costs.
Effect or Potential Effect
The payments of $14,215 were unauthorized loans and therefore considered to be questioned
costs.
Questioned Costs
Questioned costs totaled $14,215.
Context
In connection with the procedures applied to a sample of 25 disbursements, there were 3 instances,
totaling $4,307, where management did not detect disbursements made on behalf of another EHI
managed project. Upon review, management found additional invoices totaling $9,908.
Identification as a Repeat Finding
Not a repeat finding.
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: G - Unauthorized loans from project assets
Finding Resolution Status: Resolved. The Project was reimbursed via check in the amount of
$14,215 for the funds disbursed on behalf of a different EHI managed project on February 3, 2025.