Finding 584796 (2023-001)

Finding 2023-001: U.S. Department of Housing and Urban Development, Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 207/223(f)), Assistance Listing #14.155 Statement of Condition: During the year ended September 30, 2023, the Project overpaid the management company for reimbursement of payroll expenses for the maintenance employee of $11,534 and management fees of $4,828. Criteria: Per paragraph 9(b) of the Regulatory Agreement with HUD, payment for services, supplies, or materials shall not exceed the amount ordinarily paid for such services, supplies, or materials in the area where the supplies are rendered or the supplies or materials are furnished. Effect: Noncompliance with HUD regulations. Cause: Management oversight. Context: A test was performed to review for reasonableness of payroll and management fee expenses. Questioned Costs: $16,362 Recommendation: We recommend that the Project funds are only used for expenses of the Project. Additionally, we recommend the management company reimburse the operating cash of the Project $16,362 for overpayments. Views of Responsible Officials and Corrective Action Plan: The management company acknowledges the Project was overcharged for reimbursement of payroll expenses and management fees and will reimburse the Project operating cash for the overpayments.