Item 2022-001 Material Weakness - Underfunding of Replacement Reserve Account
Condition: The Project is required by its regulatory agreement with HUD to make monthly deposits into the replacement reserves account. The reserve was underfunded by three required monthly deposits for the year ended December 31, 2022.
Criteria: Management of the Project is responsible for complying with laws and regulations. This responsibility includes compliance with HUD regulations requiring the Project to obtain approval for replacement reserve withdrawals and to make all required deposits timely.
Cause: The Project did not review the replacement reserve transactions timely to ensure the transactions were in accordance with HUD regulations.
Effect: The Project underfunded the required replacement reserve deposits for the year ended December 31, 2022, by $1,310, which was not in accordance with the regulatory agreement approved by HUD.
Recommendation: We recommend that management take the necessary steps to ensure that future deposits are made in accordance with HUD regulations. Payments should be made monthly into the replacement reserve.
Auditee Response
and Action Plan: Management of the Project underfunded the replacement reserve account due to a personnel error. We will deposit the funds to the reserve account immediately.
Item 2022-002 Material Weakness - Failing to remit the prior year’s 2021 and 2020 surplus cash balances to the residual receipts account within 60 days after year end.
Condition: The Organization did not remit the prior year’s surplus cash balance of $17,012 to the residual receipts account within 60 days following the end of the prior year. The Organization also did not remit prior year’s 2020 surplus cash of $18,386 to the residual receipts account within 60 days following the end of prior year 2020.
Criteria: Management of the Organization is responsible for complying with laws and regulations. Any surplus funds in the project funds account at the end of the year shall be deposited into a federally insured account within 60 days following the end of the year.
Cause: The Project did not remit the project’s prior year’s or current year’s surplus cash into the residual account within 60 days following the end of the fiscal year.
Effect: The Project owed the residual receipts account $17,102 and $18,386 at year end.
Recommendation: We recommend that management review the surplus calculation at year end and ensure that any excess is deposited into the residual receipts account within 60 days following the end of the fiscal year.
Auditee Response
and Action Plan: Management of the Project was aware they are responsible for complying with laws and regulations and that they are to remit any surplus cash funds to the residual receipts account within 60 days following the end of the fiscal year. Management remitted the 2021 excess of $17,102 on December 14, 2022. Management remitted the 2020 excess of $18,386 on March 18, 2022.
Item 2022-003 Material Weakness - Unauthorized Withdrawal from Residual Receipts Reserve
Condition: The Organization is required to obtain HUD approval before the release of funds from the residual receipts reserve. The Organization withdrew funds of $8,126 for repairs and renovations to the property without approval.
Criteria: Management of the Organization is responsible for complying with laws and regulations. This responsibility includes compliance with HUD regulations requiring the Organization to obtain approval for residual receipts reserve withdrawals.
Cause: The Organization did not review the residual receipts reserve transactions timely to ensure the transactions were in accordance with HUD regulations.
Effect: The Organization released funds without HUD approval, which was not in accordance with the regulatory agreement approved by HUD.
Recommendation: We recommend that management take the necessary steps to ensure that future withdrawals are made in accordance with HUD regulations.
Auditee Response
and Action Plan: Management of the Project was unaware funds were mistakenly withdrawn for repair and renovations to the project. We will deposit the funds to the reserve account immediately.
Item 2022-001 Material Weakness - Underfunding of Replacement Reserve Account
Condition: The Project is required by its regulatory agreement with HUD to make monthly deposits into the replacement reserves account. The reserve was underfunded by three required monthly deposits for the year ended December 31, 2022.
Criteria: Management of the Project is responsible for complying with laws and regulations. This responsibility includes compliance with HUD regulations requiring the Project to obtain approval for replacement reserve withdrawals and to make all required deposits timely.
Cause: The Project did not review the replacement reserve transactions timely to ensure the transactions were in accordance with HUD regulations.
Effect: The Project underfunded the required replacement reserve deposits for the year ended December 31, 2022, by $1,310, which was not in accordance with the regulatory agreement approved by HUD.
Recommendation: We recommend that management take the necessary steps to ensure that future deposits are made in accordance with HUD regulations. Payments should be made monthly into the replacement reserve.
Auditee Response
and Action Plan: Management of the Project underfunded the replacement reserve account due to a personnel error. We will deposit the funds to the reserve account immediately.
Item 2022-002 Material Weakness - Failing to remit the prior year’s 2021 and 2020 surplus cash balances to the residual receipts account within 60 days after year end.
Condition: The Organization did not remit the prior year’s surplus cash balance of $17,012 to the residual receipts account within 60 days following the end of the prior year. The Organization also did not remit prior year’s 2020 surplus cash of $18,386 to the residual receipts account within 60 days following the end of prior year 2020.
Criteria: Management of the Organization is responsible for complying with laws and regulations. Any surplus funds in the project funds account at the end of the year shall be deposited into a federally insured account within 60 days following the end of the year.
Cause: The Project did not remit the project’s prior year’s or current year’s surplus cash into the residual account within 60 days following the end of the fiscal year.
Effect: The Project owed the residual receipts account $17,102 and $18,386 at year end.
Recommendation: We recommend that management review the surplus calculation at year end and ensure that any excess is deposited into the residual receipts account within 60 days following the end of the fiscal year.
Auditee Response
and Action Plan: Management of the Project was aware they are responsible for complying with laws and regulations and that they are to remit any surplus cash funds to the residual receipts account within 60 days following the end of the fiscal year. Management remitted the 2021 excess of $17,102 on December 14, 2022. Management remitted the 2020 excess of $18,386 on March 18, 2022.
Item 2022-003 Material Weakness - Unauthorized Withdrawal from Residual Receipts Reserve
Condition: The Organization is required to obtain HUD approval before the release of funds from the residual receipts reserve. The Organization withdrew funds of $8,126 for repairs and renovations to the property without approval.
Criteria: Management of the Organization is responsible for complying with laws and regulations. This responsibility includes compliance with HUD regulations requiring the Organization to obtain approval for residual receipts reserve withdrawals.
Cause: The Organization did not review the residual receipts reserve transactions timely to ensure the transactions were in accordance with HUD regulations.
Effect: The Organization released funds without HUD approval, which was not in accordance with the regulatory agreement approved by HUD.
Recommendation: We recommend that management take the necessary steps to ensure that future withdrawals are made in accordance with HUD regulations.
Auditee Response
and Action Plan: Management of the Project was unaware funds were mistakenly withdrawn for repair and renovations to the project. We will deposit the funds to the reserve account immediately.
Item 2022-001 Material Weakness - Underfunding of Replacement Reserve Account
Condition: The Project is required by its regulatory agreement with HUD to make monthly deposits into the replacement reserves account. The reserve was underfunded by three required monthly deposits for the year ended December 31, 2022.
Criteria: Management of the Project is responsible for complying with laws and regulations. This responsibility includes compliance with HUD regulations requiring the Project to obtain approval for replacement reserve withdrawals and to make all required deposits timely.
Cause: The Project did not review the replacement reserve transactions timely to ensure the transactions were in accordance with HUD regulations.
Effect: The Project underfunded the required replacement reserve deposits for the year ended December 31, 2022, by $1,310, which was not in accordance with the regulatory agreement approved by HUD.
Recommendation: We recommend that management take the necessary steps to ensure that future deposits are made in accordance with HUD regulations. Payments should be made monthly into the replacement reserve.
Auditee Response
and Action Plan: Management of the Project underfunded the replacement reserve account due to a personnel error. We will deposit the funds to the reserve account immediately.
Item 2022-002 Material Weakness - Failing to remit the prior year’s 2021 and 2020 surplus cash balances to the residual receipts account within 60 days after year end.
Condition: The Organization did not remit the prior year’s surplus cash balance of $17,012 to the residual receipts account within 60 days following the end of the prior year. The Organization also did not remit prior year’s 2020 surplus cash of $18,386 to the residual receipts account within 60 days following the end of prior year 2020.
Criteria: Management of the Organization is responsible for complying with laws and regulations. Any surplus funds in the project funds account at the end of the year shall be deposited into a federally insured account within 60 days following the end of the year.
Cause: The Project did not remit the project’s prior year’s or current year’s surplus cash into the residual account within 60 days following the end of the fiscal year.
Effect: The Project owed the residual receipts account $17,102 and $18,386 at year end.
Recommendation: We recommend that management review the surplus calculation at year end and ensure that any excess is deposited into the residual receipts account within 60 days following the end of the fiscal year.
Auditee Response
and Action Plan: Management of the Project was aware they are responsible for complying with laws and regulations and that they are to remit any surplus cash funds to the residual receipts account within 60 days following the end of the fiscal year. Management remitted the 2021 excess of $17,102 on December 14, 2022. Management remitted the 2020 excess of $18,386 on March 18, 2022.
Item 2022-003 Material Weakness - Unauthorized Withdrawal from Residual Receipts Reserve
Condition: The Organization is required to obtain HUD approval before the release of funds from the residual receipts reserve. The Organization withdrew funds of $8,126 for repairs and renovations to the property without approval.
Criteria: Management of the Organization is responsible for complying with laws and regulations. This responsibility includes compliance with HUD regulations requiring the Organization to obtain approval for residual receipts reserve withdrawals.
Cause: The Organization did not review the residual receipts reserve transactions timely to ensure the transactions were in accordance with HUD regulations.
Effect: The Organization released funds without HUD approval, which was not in accordance with the regulatory agreement approved by HUD.
Recommendation: We recommend that management take the necessary steps to ensure that future withdrawals are made in accordance with HUD regulations.
Auditee Response
and Action Plan: Management of the Project was unaware funds were mistakenly withdrawn for repair and renovations to the project. We will deposit the funds to the reserve account immediately.
Item 2022-001 Material Weakness - Underfunding of Replacement Reserve Account
Condition: The Project is required by its regulatory agreement with HUD to make monthly deposits into the replacement reserves account. The reserve was underfunded by three required monthly deposits for the year ended December 31, 2022.
Criteria: Management of the Project is responsible for complying with laws and regulations. This responsibility includes compliance with HUD regulations requiring the Project to obtain approval for replacement reserve withdrawals and to make all required deposits timely.
Cause: The Project did not review the replacement reserve transactions timely to ensure the transactions were in accordance with HUD regulations.
Effect: The Project underfunded the required replacement reserve deposits for the year ended December 31, 2022, by $1,310, which was not in accordance with the regulatory agreement approved by HUD.
Recommendation: We recommend that management take the necessary steps to ensure that future deposits are made in accordance with HUD regulations. Payments should be made monthly into the replacement reserve.
Auditee Response
and Action Plan: Management of the Project underfunded the replacement reserve account due to a personnel error. We will deposit the funds to the reserve account immediately.
Item 2022-002 Material Weakness - Failing to remit the prior year’s 2021 and 2020 surplus cash balances to the residual receipts account within 60 days after year end.
Condition: The Organization did not remit the prior year’s surplus cash balance of $17,012 to the residual receipts account within 60 days following the end of the prior year. The Organization also did not remit prior year’s 2020 surplus cash of $18,386 to the residual receipts account within 60 days following the end of prior year 2020.
Criteria: Management of the Organization is responsible for complying with laws and regulations. Any surplus funds in the project funds account at the end of the year shall be deposited into a federally insured account within 60 days following the end of the year.
Cause: The Project did not remit the project’s prior year’s or current year’s surplus cash into the residual account within 60 days following the end of the fiscal year.
Effect: The Project owed the residual receipts account $17,102 and $18,386 at year end.
Recommendation: We recommend that management review the surplus calculation at year end and ensure that any excess is deposited into the residual receipts account within 60 days following the end of the fiscal year.
Auditee Response
and Action Plan: Management of the Project was aware they are responsible for complying with laws and regulations and that they are to remit any surplus cash funds to the residual receipts account within 60 days following the end of the fiscal year. Management remitted the 2021 excess of $17,102 on December 14, 2022. Management remitted the 2020 excess of $18,386 on March 18, 2022.
Item 2022-003 Material Weakness - Unauthorized Withdrawal from Residual Receipts Reserve
Condition: The Organization is required to obtain HUD approval before the release of funds from the residual receipts reserve. The Organization withdrew funds of $8,126 for repairs and renovations to the property without approval.
Criteria: Management of the Organization is responsible for complying with laws and regulations. This responsibility includes compliance with HUD regulations requiring the Organization to obtain approval for residual receipts reserve withdrawals.
Cause: The Organization did not review the residual receipts reserve transactions timely to ensure the transactions were in accordance with HUD regulations.
Effect: The Organization released funds without HUD approval, which was not in accordance with the regulatory agreement approved by HUD.
Recommendation: We recommend that management take the necessary steps to ensure that future withdrawals are made in accordance with HUD regulations.
Auditee Response
and Action Plan: Management of the Project was unaware funds were mistakenly withdrawn for repair and renovations to the project. We will deposit the funds to the reserve account immediately.