Condition: The Organization funded its reserve for replacement account in the amount of $30,000 during the year ended December 31, 2022. This amount meets the annual funding requirement. However, the reserve for replacement account is underfunded by $77,671 as of December 31, 2022, due to the cumulative effect of underfunding the reserve in previous years. Criteria: As required by the Regulatory Agreement with HUD, the Organization must fund a reserve for replacement account in the amount of $30,005 on an annual basis. Cause: The Organization did not possess adequate cash flow to meet the requirement in previous years. Effect: The reserve for replacement account was underfunded during the years ended December 31, 2017 through 2021. During those years, the Organization was not in compliance with the reserve for replacement requirement as stated in the Regulatory Agreement. As of December 31, 2022, the reserve for replacement account was underfunded by a total of $77,671. Recommendation: We recommend the Organization contact HUD to evaluate its obligation to fund prior deficiencies incurred.
Condition: During the year ended December 31, 2022, the Organization requested retroactive adjustments on their 2022 Housing Assistance Payment (HAP) voucher requests to account for the increase in contract rent per unit that was not appropriately requested in the prior year. The Organization mistakenly requested these adjustments twice, and therefore, received subsidy revenue from HUD in excess of what they were entitled to. Criteria: Internal controls should be in place to ensure the Organization is utilizing the proper contract rental rate in the monthly HAP vouchers, and to ensure the amounts received per tenant do not exceed the maximum amount allowed. Cause: Human error in incorporating the contract rent increase adjustments into the monthly HAP voucher requests submitted to HUD. Effect: The Organization requested and received $12,098 more of HUD rent subsidies than they were entitled to. Recommendation: We recommend the Organization implement procedures to ensure that subsidy amounts requested from HUD do not exceed the maximum amount, and to ensure any contract rent related adjustments are only requested for once.
Condition: The Organization funded its reserve for replacement account in the amount of $30,000 during the year ended December 31, 2022. This amount meets the annual funding requirement. However, the reserve for replacement account is underfunded by $77,671 as of December 31, 2022, due to the cumulative effect of underfunding the reserve in previous years. Criteria: As required by the Regulatory Agreement with HUD, the Organization must fund a reserve for replacement account in the amount of $30,005 on an annual basis. Cause: The Organization did not possess adequate cash flow to meet the requirement in previous years. Effect: The reserve for replacement account was underfunded during the years ended December 31, 2017 through 2021. During those years, the Organization was not in compliance with the reserve for replacement requirement as stated in the Regulatory Agreement. As of December 31, 2022, the reserve for replacement account was underfunded by a total of $77,671. Recommendation: We recommend the Organization contact HUD to evaluate its obligation to fund prior deficiencies incurred.
Condition: During the year ended December 31, 2022, the Organization requested retroactive adjustments on their 2022 Housing Assistance Payment (HAP) voucher requests to account for the increase in contract rent per unit that was not appropriately requested in the prior year. The Organization mistakenly requested these adjustments twice, and therefore, received subsidy revenue from HUD in excess of what they were entitled to. Criteria: Internal controls should be in place to ensure the Organization is utilizing the proper contract rental rate in the monthly HAP vouchers, and to ensure the amounts received per tenant do not exceed the maximum amount allowed. Cause: Human error in incorporating the contract rent increase adjustments into the monthly HAP voucher requests submitted to HUD. Effect: The Organization requested and received $12,098 more of HUD rent subsidies than they were entitled to. Recommendation: We recommend the Organization implement procedures to ensure that subsidy amounts requested from HUD do not exceed the maximum amount, and to ensure any contract rent related adjustments are only requested for once.