Audit 393782

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Capital Advances, Section 8/202 Project Rental Assistance Payments, Section 202 – Demonstration Pre-Development Planning Grant Assistance Listing Number: 14.157 Federal Award Identification Number and Year: N/A Award Period: January 1, 2025 through December 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Finding Non Compliance: Description of Universe Tested: Reviewed the monthly deposits to the reserve for replacement account. Criteria or specific requirement: Management of the Project is required to make 12 monthly payments totaling $43,900. Condition: According to HUD Regulations, the Organization is required to maintain a certain level of funding in their reserve for replacement accounts to ensure the availability of funds for future repairs and replacements. Questioned costs: N/A Context: Management of the Project is required to make 12 monthly payments totaling $43,900. Cause: The Reserve for Replacement account was underfunded by $3,674 during the year. Effect: The Organization is not in compliance with the Reserve for Replacement funding requirements. Repeat Finding: No. Recommendation: The Organization should review its budgeting process to ensure compliance with HUD funding requirements for the reserve for replacement account. Additionally, they should implement regular monitoring to prevent future underfunding. Views of responsible officials: Management agrees with the finding and will take steps to adjust the budget and ensure the Reserve for Replacement account is adequately funded moving forward.