Finding Text
Statement of Condition During the year ended December 31, 2021, the project overpaid payroll expenses in the amount of $3,594 from project cash without HUD approval. During 2022, only partial payment was refunded to the project. The amount due to project as of December 31, 2022 is $2,212. Criteria In accordance with HUD Handbook 4571.3, Section 202 Supportive Housing for the Elderly, loans are not permitted to be made from project cash without prior authorization from HUD. Questioned Costs $3,594 Effect The payment of $3,594 is unauthorized loans and therefore considered to be questioned costs. Context During 2021, the property overpaid holiday bonus to one employee. The bonus was $300 but the property paid $3,894, resulting in payroll bonus overpayment of $3,594. Cause Procedures were not in place to ensure that cash disbursements of projects funds were limited to project operating costs. Identification as a Repeat Finding Finding No. 2021-002 Recommendation Management should immediately reimburse the amount due to the project and establish procedures to ensure payments of this nature are not made in the future. Auditor Noncompliance Code: G - Unauthorized loans from project assets. Finding Resolution Status: Completed. Reporting Views of Responsible Officials and Planned Corrective Action The employee began repayment of the overpaid payroll in May 2022 as a payroll deduction and the funds were fully reimbursed back to the project in 2023.