Finding 972683 (2023-001)

Criteria The terms of the regulatory agreement require distributions to be limited to available surplus cash computed on an annual or semi-annual basis. Condition During the year ended December 31, 2023, Grand Manor Mutual Housing Association, Inc. distributed $115,000 in excess of surplus cash available for distribution. Cause Procedures were not in place to ensure that distributions of cash were limited to available surplus cash in accordance with HUD regulations. Effect or Potential Effect The payments of $115,000 are unauthorized distributions and therefore considered to be questioned costs. Questioned Costs $115,000 Recommendations 2023-1-a Management should follow its procedures to limit distributions to the surplus cash amount calculated semi-annually and at year end. 2023-1-b Management should immediately reimburse the project's cash account for the unauthorized distribution. Auditor Noncompliance Code: H - Unauthorized distribution of project assets Reporting Views of Responsible Officials Our action plan includes documentation, management approval, and will remedy the problem going forward. Advances are to be recorded in a liability account that does not roll up into the AP module. This will eliminate paying advances in error. The payment is only moved into the AP module, for processing, after we determine we have excess cash and have the appropriate supporting documentation and approval. Surplus cash can only be calculated semi-annually and at year-end. If the calculation reflects excess cash, we must make payment within 90 days.