Finding Text
Finding No. 2025-001 – Residual receipt deposit.
Federal Program
ALN 14.157 - U.S. Department of Housing and Urban Development Section 202 Capital Advance Program – Supportive Housing for the Elderly
Name of Federal Agency
U. S. Department of Housing and Urban Development (HUD)
Category
Other Matter
Compliance requirement
Special Tests
Criteria
Per HUD guidelines and the Project's regulatory agreement, any residual receipt cash surplus must be deposited into the residual receipt account within 90 days of fiscal year-end.
Condition
As of March 31, 2024, the Project had a surplus cash balance of $49,570. This surplus was deposited into a Residual Receipts account after the required 90-day period had elapsed. The deposit was ultimately made on March 31, 2025, approximately 12 months after fiscal year-end. Per HUD guidelines and the Project's regulatory agreement, any residual receipt cash surplus must be deposited into the residual receipt account within 90 days of fiscal year-end.Cause The delay in depositing the surplus cash into the residual receipts restricted account was due to an issue with the client's entity Employer Identification Number (EIN) on file with the financial institution. This discrepancy prevented the timely opening of the required account. The Project indicated that the process to correct the EIN and open the new bank account involved multiple steps and coordination with the bank, which significantly extended the timeline beyond the required deposit period.
Effect
Noncompliance with the 90-day deposit requirement may subject the Project to regulatory scrutiny and potential sanctions, including findings in the annual audit and additional oversight from HUD.
Questioned Cost
None.
Context
Projects operating under HUD regulatory agreements are required to deposit any residual cash surplus into a restricted residual receipts account within 90 days after the fiscal year-end. These funds are intended to be used for future project needs as approved by HUD, and the timely deposit is a critical compliance measure to ensure appropriate financial oversight and fund availability. This process helps HUD monitor the financial health of the project and prevent misuse of surplus cash.
Report of a prior year finding
No
Recommendation
We recommend that management implement procedures to track and ensure timely deposits of residual receipt cash surpluses in accordance with HUD requirements. This may include setting calendar reminders, assigning responsibilities, and performing periodic reviews after each fiscal year-end.
Views of responsible officials and planned corrective actions.
The Project’s management agrees with this finding. Please refer to the corrective action plan on page 41.