We audited the Yorkville Cooperative (Cooperative) based on a request from the U.S. Department of Housing and Urban Development’s (HUD) Richmond Multifamily Program Center and a citizen complaint. The objective of the audit was to determine whether the Cooperative administered its Section 221(d)(3) property and housing assistance contract according to its regulatory agreement and HUD requirements.
The Cooperative did not administer its Section 221(d)(3) property and housing assistance contract in accordance with its regulatory agreement and HUD requirements. Specifically, it used operating funds to pay for ineligible expenses (legal fees and resident promotions) and made erroneous calculations and unsupported housing assistance payments on behalf of its board members. It also billed HUD for housing assistance payments it may not have been eligible to receive.
We recommend that the Director of the Richmond Multifamily Program Center require the Cooperative to reimburse its operating account from nonfederal funds $243,772 for ineligible expenses. Also, the Cooperative needs to develop and implement adequate procedures and controls to ensure that disbursements made from its operating account are for expenses that are reasonable, necessary, and in accordance with program requirements. We further recommend that the Cooperative reimburse HUD from nonfederal funds $14,313 for the overpayment of housing assistance payments and provide support or reimburse HUD $66,850 from nonfederal funds for unsupported housing assistance payments. The Cooperative also needs to develop and implement procedures to ensure that housing assistance payments are correctly calculated and supported with the required documentation.