Finding Text
Criteria: In accordance with the requirements set by the US Department of Housing and Urban Development
for the major program, Section 207 HUD Insured Mortgage, the Organization is obligated to deposit any
surplus cash available at year-end into the residual receipts account within 60 days of the fiscal year-end
(August 30th).
Condition: The Organization failed to deposit surplus cash for the fiscal year ended June 30, 2022.
Effect: The Organization is noncompliant with the requirements of the Section 207 HUD Insured Mortgage.
Cause: The Organization used the surplus cash at the end of the June 30, 2022 fiscal year to repay their
residual receipts note rather than depositing the funds into the residual receipts account and receiving HUD
approval to repay the note.
Repeat finding: This is not a repeat finding.
Context: The deposit was required to be made into the residual receipts account within 60-days of year-end.
No deposit was made.
Recommendation: We recommend that management makes the required residual receipts deposit timely
when surplus cash is available at year-end. Proper HUD approvals should then be obtained for any
withdrawals from the residual receipts account.
Management response: Management agrees with this finding. See Corrective Action Plan.