Finding Text
Finding 2022-001: U.S. Department of Housing and Urban Development, Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 223(f)/207) Statement of Condition: During the year ended December 31, 2022, the Project paid expenses of a related entity for accounting fees of $2,000. Criteria: Per Section 9 g. of the Regulatory Agreement, Project funds can only be used for reasonable operating expenses of the Project. Effect: Noncompliance with HUD regulations. Cause: The use of the Project account by a related entity. Context: A test was performed to review for reasonableness of related party transactions. Recommendation: We recommend that the Project funds are only used for expenses of the Project. Additionally, we recommend the related entity reimburse the operating cash of the Project $2,000 for the accounting fees paid. Questioned Costs: $2,000 Views of Responsible Officials and Corrective Action Plan: Management acknowledges the Project funds were used for expenses of another entity. Management will ensure the related entity reimburses the operating cash of the Project $2,000 for the accounting fees paid and ensure that the Project funds are only used for expenses of the Project.