Type of Finding: Significant deficiency Condition: According to HUD regulations, NPOs are required to maintain a certain level of funding in their R&R accounts to ensure the availability of funds for future repairs and replacements. Cause: The R&R account was underfunded by $1,508 for the year. Effect: Insufficient funds in the R&R account could lead to the inability to cover necessary repairs and replacements, potentially affecting the quality and safety of the housing provided. Recommendation: The organization should review its budgeting process to ensure compliance with HUD funding requirements for the R&R account. Additionally, they should implement regular monitoring to prevent future underfunding. Management Response: Management agrees with the finding and will take steps to adjust the budget and ensure the R&R account is adequately funded moving forward.