Finding Text
Finding No. 2024-003; Federal Assistance Listing Number 14.157
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 property paid 2 of 25 cash disbursements tested in
the amount of $2,204 on behalf of an affiliate from project cash without HUD approval. The amount
due to the project as of December 31, 2024 is $2,204.
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 $2,204 were unauthorized loans and therefore considered to be questioned costs.
Questioned Costs
$2,204
Context
The entity paid $2,204 of expenses on behalf of a related party entity.
Identification as a Repeat Finding
No
Recommendation
Management should immediately reimburse the amount due to the property 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
Views of Responsible Officials and Planned Corrective Actions
REACH has policies in place to ensure that costs are allocated to the appropriate property. In 2024,
costs from an adjacent property, Community Housing I, were accidentally paid by Community
Housing II. These funds were repaid to the Community Housing II in 2025.