Finding Text
Information on universe: It was noted during testing that the management agent withdrew more than the HUD approved amount from the reserve for replacement account.
Sample size: Monthly reserve activity is tested for compliance.
Identification of repeat finding: No
Condition: A withdrawal from the reserve for replacement was greater than the amount approved by HUD.
Criteria: All reserve for replacement withdrawals should match the amount approved by HUD.
Effect: Reserve funds were spent on items not approved by HUD.
Context: Auditor reviewed the source documents noting the amount withdrew was greater than the approved amount.
Cause: lack of oversight at the management agent.
Recommendation: The excess withdrawal should be returned to the reserve account. Additionally, a procedure should be implemented to ensure that amounts withdrawn from the reserve for replacement account do not exceed the approved amount.