Finding Text
2023-001 – Special Tests and Provisions - Noncompliance
Information on Federal Program:
U.S. Department of Housing and Urban Development, Award Listing Numbers 14.181.
Criteria:
Part 4 of the May 2023 2 CFR Part 200, Appendix XI, Compliance Supplement, for Award Listing Number 14.181 requires “any surplus funds in the project funds account (including earned interest) at the end of the fiscal year shall be deposited in a federally insured account within 60 days following the end of the fiscal year. Withdrawals from this account may be made only for project purposes and with the approval of HUD (24 CFR section 891.400(e)).”
Conditions:
During our review of the Schedule of Computation of Surplus Cash, we noted that MRCS V had surplus cash of $5,998. We noted that these funds would be required to be deposited within a federally insured residual receipts within 60 days following the end of the fiscal year. MRCS V did not deposit surplus funds within 60 days following the end of the fiscal year.
Questioned Costs:
None identified.
Cause:
Funds were not deposited within 60 days as this is the first time surplus funds were available to be deposited.
Effect:
Surplus funds were not deposited timely.
Context:
Since inception, MRCS V has included the Due to Affiliate account balance within their Schedule of Computation of Surplus Cash, resulting in a deficiency of cash. The Due to Affiliate balance only includes project expenses paid by Citizens Options Unlimited, Inc., the managing agent of MRCS V, on behalf of MRCS V. In 2023, MRCS V received a notification from the U.S. Department of Housing and Urban Development (HUD) that Due to Affiliate balances shall not be included in the Computation of Surplus Cash/Cash (Deficiency) unless written approval has been received from HUD. As of the date of this report, no written approval has been received resulting in surplus cash.
Recommendation:
We recommend management implements a process to monitor their available cash balances to determine if there is a surplus cash balance at the fiscal year end date within one month of the fiscal year end date to allow for timely deposits into a residual receipts account, as necessary.
Views of Responsible Official and Planned Corrective Action:
MRCS V agrees with the finding identified. MRCS V’s response to the finding is described in the accompanying management’s corrective action plan.