Finding Text
Finding 2023-001: Distributions in excess of surplus cash available
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Agency: Illinois Housing Development Authority
– Program Name: Section 8 Project-Based Cluster, Section 8 Housing Assistance Payment
Program
Assistance Listing Number: 14.195
Award Numbers: IL06T861037
Category of Finding: Unauthorized distribution of project assets
Criteria: The Regulatory Agreement for Multifamily Projects requires the computation of surplus cash prior to the distribution of funds to members and repayment of related-party debt. Any surplus cash in the project funds account should be deposited in a federal insured account and withdrawals may be made only for project purposes and with the approval of HUD.
Condition/Context: There were distributions in excess of surplus cash available to be distributed during the year ended June 30, 2023, in the amount of $27,294. The population consists of distribution in the amount of $49,610.
Cause: The Company made the distributions without considering surplus cash calculation.
Effect: This may result in funds being distributed in excess of allowed amounts.
Questioned Costs: $27,294
Repeat Finding: Yes
Recommendation: We recommend management to complete and review the calculation of surplus cash to ensure it is accurate and ensure surplus cash is available prior to distributions.
Views of responsible officials: Management agrees with the aforementioned finding. See corrective action plan.