Finding 971408 (2023-002)

Criteria: The Project's Borrower Regulatory Agreement with HUD requires the Organization to deposit any excess surplus cash into a residual receipts account within 90 days after the end of the annual or semi-annual fiscal period for which surplus cash is calculated. Condition: The Organization had surplus cash as of June 30, 2021 which it had not deposited into a residual receipts account by September 2021 because the semi-annual calculation was not performed timely. The Organization deposited $622,564 of surplus cash for the period ended December 31, 2020 into the residual receipts account during 2022. Questioned Costs: None Context: The surplus cash balance was $2,111,922 at June 30, 2021. Effect: No negative effect was discovered during the audit. Cause: As the Organization had deficiencies in surplus cash in all prior periods except for December 31, 2020, management was not expecting a surplus cash position as of June 30, 2021 and a residual receipts account was therefore not established. The Organization has not deposited June 30, 2021 surplus cash in order to maintain sufficient levels of cash flow. Repeat finding: Yes, prior year finding 2022-002. Recommendation: Management should deposit the amount of surplus cash at June 30, 2021 into the residual receipts account as soon as possible and monitor surplus cash closely during each annual and semi-annual period.