Finding 555735 (2024-001)

Significant Deficiency
Requirement
N
Questioned Costs
-
Year
2024
Accepted
2025-04-23
Audit: 354365
Organization: Victory Heights, Inc. (MD)
Auditor: Cohnreznick LLP

AI Summary

  • Core Issue: Victory Heights failed to remit $10,278 in excess residual receipts to HUD after the PRAC contract expired on August 31, 2024.
  • Impacted Requirements: Management did not submit Form HUD-9250, violating HUD's requirement to release funds exceeding $250 per unit.
  • Recommended Follow-Up: Management should promptly submit Form HUD-9250 and disburse excess funds to HUD upon approval.

Finding Text

Criteria Any balance in Victory Heights's residual receipts reserve account greater than $250 per unit must be remitted to HUD's Accounting Center upon termination of the PRAC, in accordance with the Consolidated Appropriations Act, 2016 enacted on December 18, 2015 applicable for projects with PRAC expiration dates through September 30, 2025. Termination is defined as expiration of the contract term which for most PRACs is the annual contract anniversary date. Victory Heights's PRAC contract expired on August 31, 2024. Condition During the year ended December 31, 2024, management did not submit Form HUD-9250, "Fund Authorization" to HUD upon termination of the PRAC. As a result, management did not remit excess residual receipts of $10,278 as of August 31, 2024, to HUD. Cause The amount held in the residual receipts reserve was not returned to HUD due to management not submitting Form HUD-9250 on a timely basis. On March 14, 2025, management submitted to HUD a request for approval to transfer $30,625 from the residual receipt reserve to HUD. Effect or Potential Effect The holding of the excess funds in the residual receipts reserve is a violation of HUD's required release of funds above the declared threshold of $250 per unit. Questioned Costs None Context Isolated instance which was not part of a statistical sample. Identification as a Repeat Finding Not a repeat finding. Recommendation Management should immediately submit the Form HUD-9250, "Fund Authorization" and disburse any excess funds from the residual receipts reserve to HUD upon approval of Form HUD-9250. Auditor Noncompliance Code: Z - Other Finding Resolution Status: In-process Views of Responsible Officials Current management has submitted a 9250 to HUD for approval of release of Residual Receipt funds above $250 per unit to be returned to HUD. As part of the PRAC renewal process, current management will follow HUD guidelines that require a submission of a 9250 residual receipt request with the renewal submission.

Corrective Action Plan

a. Comments on the Finding and Each Recommendation Management agrees that when the PRAC renewal for 2024 was submitted, they failed to include a return to HUD the balance of the residual receipts above $250 per unit. This is accounted to the recent Management Agent transition on 7/1/2024 and transition of software and accounts. b. Action(s) Taken or Planned on the Finding Current management has submitted a 9250 to HUD for approval of release of Residual Receipt funds above $250 per unit to be returned to HUD. As part of the PRAC renewal process, current management will follow HUD guidelines that require a submission of a 9250 residual receipt request with the renewal submission.

Categories

HUD Housing Programs Cash Management

Other Findings in this Audit

  • 555736 2024-002
    Material Weakness Repeat
  • 555737 2024-002
    Material Weakness Repeat
  • 555738 2024-003
    Significant Deficiency
  • 555739 2024-003
    Significant Deficiency
  • 1132177 2024-001
    Significant Deficiency
  • 1132178 2024-002
    Material Weakness Repeat
  • 1132179 2024-002
    Material Weakness Repeat
  • 1132180 2024-003
    Significant Deficiency
  • 1132181 2024-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $7.77M
14.239 Home Investment Partnerships Program $4.25M