Finding Text
Condition: The Project deposited surplus cash in excess of allowable amounts.
Criteria: The Company is required to follow HUD’s guidelines and procedures for depositing surplus cash
into a residual receipts account in an amount which is equal to allowable amount per surplus cash
computation within 90 days after the end of the fiscal period.
Cause: Internal controls at the Company are not properly designed to ensure timely calculation and deposit
of surplus cash amounts.
Effect: The Company was not in compliance with their Regulatory Agreement.
Context: During our recalculation of management’s computation of surplus cash, we noted the residual
receipts deposit was based on a preliminary calculation which resulted in excess payment to the residual
receipts account of $151,275.
Recommendation: The Company should design their internal controls to ensure that the calculation of
surplus cash is reviewed and performed timely, to ensure they will comply with HUD guidelines, as stated
above.
Reporting Views of Responsible Officials: Management has acknowledged a breach in protocol and
deposited the current year’s surplus cash on February 5, 2021.