Finding Text
Findings reference number: 2025-002 - Title and AL Number of Federal Program: Section 8 Housing Assistance (AL 14.195) - Type of finding: Federal Award. - Resolution Status: Resolved - Population size: N/A - Sample size: N/A - Repeat finding: No. - Criteria: A withdrawal from the residual receipts account can only be made with the prior approval of HUD. - Statement of Condition: During our testing of residual receipts account transactions, it was discovered that the Project had withdrawn $47,420 and transferred it back after 3 months. - Cause: Management needed the funds to make a down payment on necessary improvements and repairs. Management later included this expenditure along with other major repairs and improvements in its request to HUD for withdrawal of funds from the reserve for replacement account. - Effect: A withdrawal was made from the residual receipts account without obtaining prior approval from HUD and the funds were later deposited back to the account. -Noncompliance code: C - Questioned costs: None. - Reporting views of officials: Management asserts that this withdrawal is included in its request for withdrawal from reserve for replacement account which was approved by HUD. - Contract number: 114-11440. - Context: A withdrawal of $47,420 from the residual receipts account and a later deposit of the same amount three months later was noticed during the audit. - Recommendation: Management should only withdraw funds from the residual receipts account with prior approval of HUD even in case of a temporary loan. - Auditors' summary of auditee's comments: They are in agreement, and will get prior approval from HUD for any withdrawal from the residual receipts account in the future. - Completion date: 5/31/2026. - Response: Management believed that including this expenditure in its request for withdrawal of funds from the reserve for replacement account was sufficient. Management also promptly replaced the funds taken temporarily from the residual receipts account, once they received the funds from the reserve for replacement account controlled by the lender. In the future, management will make sure to obtain prior approval from HUD before making any withdrawals from the residual receipts account.