U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the Retreat at Church Ranch to determine whether the owner submitted a management agent certification to HUD for proper approval and to determine whether the books of account were complete and accurate. We conducted this audit mainly because of a referral from the U. S. Department of Housing and Urban Development’s (HUD) Departmental Enforcement Center, requesting a financial review of the transactions within the project’s operating account.
The owner did not submit the management agent certification to HUD for proper approval. He disregarded HUD guidelines and HUD’s requests for the approved certification. As a result, the owner improperly paid more than $119,000 of management fees. The project did not have accurate or complete books of account. There were no written financial management policies and the owner had full control over the final books of account. As a result, the project management and HUD lacked required information on the financial status of the project.
We recommend that HUD require the Retreat to complete and submit the required certification to HUD for approval, repay any management agent fees determined to be improperly disbursed, and establish and implement comprehensive financial policies and procedures including the proper maintenance of its books of account.