Finding 974998 (2023-002)

Statement of Condition During the years ended July 31, 2019, 2020, 2021, 2022 and 2023, management did not repay the loan advanced from the reserve for replacements upon receipt of the Section 8 subsidy that was outstanding at July 31, 2018. The loan in the amount of $19,337 is deemed to be an unauthorized distribution at July 31, 2023. The amount due to the reserve for replacement has not been deposited as of the date of this report. Criteria According to the HUD Handbook 4350.1, Appendix 2, the terms of the loan from the reserve for replacement required repayment from the proceeds of the Section 8 subsidy. Questioned Costs None Effect or Potential Effect The Organization is not in compliance with the requirements of the regulatory agreement. Context HUD approved a loan from the reserve for replacement with the stipulation that the loan be repaid when the delinquent Section 8 subsidy was paid by HUD. Cause Management did not maintain adequate controls in 2019 over the reserve for replacement requirements established with the loan advance to ensure the timely repayment of the loan upon receipt of the delayed Section 8 subsidy. Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number 2022-002). Recommendation Management should establish internal controls and procedures to ensure that required payments are made timely. Auditor's Noncompliance Code: N - Reserve for replacements deposits Reporting Views of Responsible Officials A repayment plan has been put in place. Commencing in March 2024, four monthly installment payments will be made in the amount of $4,834 until the balance is paid in full.