Finding 555741 (2024-002)

Criteria Loans are not permitted to be made from project cash without prior authorization from HUD in accordance with the HUD regulatory agreement and PRAC contract. Condition During the year ended December 31, 2024, Victory Oaks paid expenses in the amount of $3,941 on behalf of an affiliate from project cash without HUD approval. The amount due from the project as of December 31, 2024 is $3,941. 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 payment of $3,941 is an unauthorized loan and therefore considered to be a questioned cost. Questioned Costs Expenses paid on behalf of an affiliate of $3,941. Context Isolated instance which was not part of a statistical sample. Identification as a Repeat Finding This finding is 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: In-process Views of Responsible Officials The Management Agent will ensure that invoices will be recorded accurately and according to HUD guidelines. A list of service accounts by property is cross-referenced prior to invoice approval and utility accounts will be transferred to a third party for processing and payment.