Finding Text
Statement of Condition: Project funds were used to pay a related party. The related party, in turn, paid the operating expenses of the Project. Cause: For ease of administration, common vendors were paid by the related party. Effect: The payments made to the related party could be disallowed. Auditor Non-Compliance Code: H - Unauthorized distribution of project assets. Questioned Costs: $95,273. Reporting View of Responsible Officials: The Organization agrees with the finding. The auditor's recommendations, as well as the local HUD field office's recommendations, are in the process of being implemented. Context: Review of the detail in the account provided evidence that
project funds were paid to the related party. Personnel were forthcoming with this practice and are in the process of correcting this finding. Recommendation: In conjunction with the Organization's local HUD field office, it was determined that the related party should invoice the Organization for project expenses on a monthly basis. In turn, the Organization should pay the invoice amount on a monthly basis.