Finding Text
Criteria: There is an expectation that the financial statements will be materially accurate when an auditor begins their final fieldwork on the audit after year-end. Minor adjustments are expected but overall, the balances should materially reflect the financial position of the entity.
Condition: During our fieldwork, we found activity within the Residual Receipts account without HUD Approvals.
Cause: Client transferring funds to operating account, and then redepositing amounts at a later date.
Effect: Client is not in compliance due to not having HUD approval for transactions within the Residual Receipts account. This could jeopardize their Section 202 status with HUD.
Recommendation: It is our recommendation that the Project does not utilize funds within the Residual Receipts account without HUD approval, as this is required per the Compliance Supplement.
Views of the Responsible Officials and Planned Corrective Actions: We understand the recommendations above and will take corrective action to implement the changes needed to ensure that funds are not utilized without HUD approval.