Finding Text
Condition - Management withdrew $42,926 of funds during the year ended March 31, 2024 to purchase a vehicle from the reserve for replacements account with HUD approval, however, management subsequently acquired a loan to finance the vehicle purchase and used the reserve funds for other purposes.
Criteria - Funds withdrawn from the reserve for replacements account are to be used for the purpose disclosed on the Funds Authorization form and loans taken out requires HUD approval.
Effect - The Company was not in compliance with the above criteria.
Cause - Funds withdrawn were not used for their intended purpose and has yet to be returned to the reserve account. Furthermore, management did not receive HUD’s approval for the vehicle loan.
Repeat Finding - This is a repeat of finding 2024-001 from the prior year.
Statistical Sampling - The sample was not intended to be, and was not, a statistically valid sample.
Recommendation - We recommend that the $42,926 of funds withdrawn be used to pay off the loan or to be returned to the reserve for replacement account.
Management’s Reply - Management will use the $42,926 of funds withdrawn from the reserves for replacements to payoff the loan acquired for the vehicle as originally intended.