Finding Text
Finding No. 2022-006 ? Unauthorized distribution Federal Assistance Listing Number Name of Federal Program or Cluster 14.157 Supportive Housing for the Elderly Information on the Universe Population Size Net assets activity for the year ended August 31, 2022. Sample Size Information N/A Identification of Repeat Finding Reference Number N/A Criteria In accordance with the Entity?s regulatory agreement with HUD, only upon approval from HUD can the Entity distribute funds from the minimum capital investment account. Statement of Condition The Entity paid back $10,0000 from the minimum capital investment to Sponsor and did not have the proper HUD approval for the distribution. Cause The cause of the unauthorized distribution was management oversight due to change in management personnel positions. Effect or Potential Effect The Entity is in violation of the requirements of its regulatory agreement. Auditor Non-Compliance Code Z ? Other Questioned Costs There were no known questioned costs. Perspective The finding represents an isolated instance of management oversight due to change in personnel. Repeat Finding No Recommendations We recommend that management evaluate its process and implement policies to mitigate the chances of distributing funds from net assets without HUD approval. Views of Responsible Officials Auditee agrees with this finding and has taken steps to prevent this from occurring in the future. A new Executive Director has taken over the responsibility for distributing funds as well as oversight from the Board of Directors. Auditee is in the process of requesting HUD approval for the distribution. If accepted by HUD, this will clear this finding for the amount distributed during this fiscal year.