Finding Text
Finding No. 2021-002 (Significant Deficiency)
Condition
The Project failed to deposit current year’s surplus cash into its residual receipts account within 90 days of
year-end.
Criteria
The Company is required to follow HUD’s guidelines and procedures for depositing surplus cash into a
residual receipts account within 90 days after the end of the fiscal period.
Cause
Management of the Company did not complete the calculation within the 90-day period as required.
Effect
The Company was not in compliance with their Regulatory Agreement.
Context
During our audit procedure for the computation of surplus cash, we recalculated the amounts in the schedule
and noted the schedule to be accurate. However, while completing our audit procedure to review the transfer
into the surplus cash account prior to the 90-day deadline, we noted the transfer was not made.
Recommendation
The Company should ensure their procedures require the calculation of residual receipts and the transfer
occur within 90 days of year-end.
Reporting Views of Responsible Officials
Management has acknowledged a breach in protocol and deposited the current year’s surplus cash on December 2, 2021.