FINDING 2022-001 ? Replacement Reserve Deposits Federal Agency: U.S. Department of Housing and Urban Development Pass through Entity: Not applicable Program Name: Section 811 Capital Advance Program Section 811 Project Rental Assistance Payments AL# and Program Expenditures: 14.181 ($1,325,900) 14.181 ($ 50,596) Award Number: N/A Federal Award Year: January 1, 2022 to December 31, 2022 Questioned Costs: None Condition Found: The reserve for replacement was not fully funded for the year ended December 31, 2022. Monthly deposits totaling $5,136 for the year should have been deposited in the account but only $3,434 was deposited. In addition, replacement reserve deposits of $3,852, $5,136 and $3,919 were not made for the years ending December 31, 2020, 2019, and 2018, respectively. Also during 2021, a $4,000 loan was taken from the account by the prior management company. There is no documentation to support HUD approving the withdrawal, and the funds were not paid back to the account by December 31, 2022. In addition, during 2020, HUD approved a $13,357 withdrawal from the account. The funds were transferred to the operating account in March 2020 and again in August 2020. Altogether, a total of $37,112 is due to the replacement reserve account. Criteria: The regulatory agreement requires that $428 be deposited in the replacement reserve account each month from January 2022 through December 2022. In addition, funds can only be withdrawn from the account with approval from HUD. Cause: The required deposits were not transferred from the operating account to the replacement reserve account for four months of the year because HUD did not pay the Housing Assistance Payment (?HAP?) voucher funds. The current management company is making replacement reserve deposit if and when HUD pays the monthly HAP voucher. Possible Asserted Effect: The replacement reserve was underfunded by $3,424 for the year ended December 31, 2022. The replacement reserve was also underfunded by $3,852, $5,136, $5,136, and $3,919 for the years ended December 31, 2021, 2020, 2019, and 2018, respectively. In addition, the operating account owes the replacement reserve account $4,000 for a loan in 2021 that has not been repaid, and $13,357 due to a duplicate transfer of funds in 2020. The cumulative total due to the replacement reserve fund is $37,112. Repeat Finding: This finding was reported in the immediately prior audit as Finding 2021-001. Recommendation: The overall reserve shortage of $37,112 should be funded as soon as possible. Management should consider requesting a replacement reserve deposit waiver for the prior year payments and or a rent increase from HUD. Management Response: The management company is making replacement reserve payments when HUD pays the HAP voucher. The Project was able to make three monthly payments for 2021 and eight for 2022. Management will transfer additional funds from operating to reserve when cash is available. The Project?s goal is be able to pay the current monthly replacement reserve deposit. The amounts due from prior years cannot be funded at this time.
FINDING 2022-001 ? Replacement Reserve Deposits Federal Agency: U.S. Department of Housing and Urban Development Pass through Entity: Not applicable Program Name: Section 811 Capital Advance Program Section 811 Project Rental Assistance Payments AL# and Program Expenditures: 14.181 ($1,325,900) 14.181 ($ 50,596) Award Number: N/A Federal Award Year: January 1, 2022 to December 31, 2022 Questioned Costs: None Condition Found: The reserve for replacement was not fully funded for the year ended December 31, 2022. Monthly deposits totaling $5,136 for the year should have been deposited in the account but only $3,434 was deposited. In addition, replacement reserve deposits of $3,852, $5,136 and $3,919 were not made for the years ending December 31, 2020, 2019, and 2018, respectively. Also during 2021, a $4,000 loan was taken from the account by the prior management company. There is no documentation to support HUD approving the withdrawal, and the funds were not paid back to the account by December 31, 2022. In addition, during 2020, HUD approved a $13,357 withdrawal from the account. The funds were transferred to the operating account in March 2020 and again in August 2020. Altogether, a total of $37,112 is due to the replacement reserve account. Criteria: The regulatory agreement requires that $428 be deposited in the replacement reserve account each month from January 2022 through December 2022. In addition, funds can only be withdrawn from the account with approval from HUD. Cause: The required deposits were not transferred from the operating account to the replacement reserve account for four months of the year because HUD did not pay the Housing Assistance Payment (?HAP?) voucher funds. The current management company is making replacement reserve deposit if and when HUD pays the monthly HAP voucher. Possible Asserted Effect: The replacement reserve was underfunded by $3,424 for the year ended December 31, 2022. The replacement reserve was also underfunded by $3,852, $5,136, $5,136, and $3,919 for the years ended December 31, 2021, 2020, 2019, and 2018, respectively. In addition, the operating account owes the replacement reserve account $4,000 for a loan in 2021 that has not been repaid, and $13,357 due to a duplicate transfer of funds in 2020. The cumulative total due to the replacement reserve fund is $37,112. Repeat Finding: This finding was reported in the immediately prior audit as Finding 2021-001. Recommendation: The overall reserve shortage of $37,112 should be funded as soon as possible. Management should consider requesting a replacement reserve deposit waiver for the prior year payments and or a rent increase from HUD. Management Response: The management company is making replacement reserve payments when HUD pays the HAP voucher. The Project was able to make three monthly payments for 2021 and eight for 2022. Management will transfer additional funds from operating to reserve when cash is available. The Project?s goal is be able to pay the current monthly replacement reserve deposit. The amounts due from prior years cannot be funded at this time.
FINDING 2022-001 ? Replacement Reserve Deposits Federal Agency: U.S. Department of Housing and Urban Development Pass through Entity: Not applicable Program Name: Section 811 Capital Advance Program Section 811 Project Rental Assistance Payments AL# and Program Expenditures: 14.181 ($1,325,900) 14.181 ($ 50,596) Award Number: N/A Federal Award Year: January 1, 2022 to December 31, 2022 Questioned Costs: None Condition Found: The reserve for replacement was not fully funded for the year ended December 31, 2022. Monthly deposits totaling $5,136 for the year should have been deposited in the account but only $3,434 was deposited. In addition, replacement reserve deposits of $3,852, $5,136 and $3,919 were not made for the years ending December 31, 2020, 2019, and 2018, respectively. Also during 2021, a $4,000 loan was taken from the account by the prior management company. There is no documentation to support HUD approving the withdrawal, and the funds were not paid back to the account by December 31, 2022. In addition, during 2020, HUD approved a $13,357 withdrawal from the account. The funds were transferred to the operating account in March 2020 and again in August 2020. Altogether, a total of $37,112 is due to the replacement reserve account. Criteria: The regulatory agreement requires that $428 be deposited in the replacement reserve account each month from January 2022 through December 2022. In addition, funds can only be withdrawn from the account with approval from HUD. Cause: The required deposits were not transferred from the operating account to the replacement reserve account for four months of the year because HUD did not pay the Housing Assistance Payment (?HAP?) voucher funds. The current management company is making replacement reserve deposit if and when HUD pays the monthly HAP voucher. Possible Asserted Effect: The replacement reserve was underfunded by $3,424 for the year ended December 31, 2022. The replacement reserve was also underfunded by $3,852, $5,136, $5,136, and $3,919 for the years ended December 31, 2021, 2020, 2019, and 2018, respectively. In addition, the operating account owes the replacement reserve account $4,000 for a loan in 2021 that has not been repaid, and $13,357 due to a duplicate transfer of funds in 2020. The cumulative total due to the replacement reserve fund is $37,112. Repeat Finding: This finding was reported in the immediately prior audit as Finding 2021-001. Recommendation: The overall reserve shortage of $37,112 should be funded as soon as possible. Management should consider requesting a replacement reserve deposit waiver for the prior year payments and or a rent increase from HUD. Management Response: The management company is making replacement reserve payments when HUD pays the HAP voucher. The Project was able to make three monthly payments for 2021 and eight for 2022. Management will transfer additional funds from operating to reserve when cash is available. The Project?s goal is be able to pay the current monthly replacement reserve deposit. The amounts due from prior years cannot be funded at this time.
FINDING 2022-001 ? Replacement Reserve Deposits Federal Agency: U.S. Department of Housing and Urban Development Pass through Entity: Not applicable Program Name: Section 811 Capital Advance Program Section 811 Project Rental Assistance Payments AL# and Program Expenditures: 14.181 ($1,325,900) 14.181 ($ 50,596) Award Number: N/A Federal Award Year: January 1, 2022 to December 31, 2022 Questioned Costs: None Condition Found: The reserve for replacement was not fully funded for the year ended December 31, 2022. Monthly deposits totaling $5,136 for the year should have been deposited in the account but only $3,434 was deposited. In addition, replacement reserve deposits of $3,852, $5,136 and $3,919 were not made for the years ending December 31, 2020, 2019, and 2018, respectively. Also during 2021, a $4,000 loan was taken from the account by the prior management company. There is no documentation to support HUD approving the withdrawal, and the funds were not paid back to the account by December 31, 2022. In addition, during 2020, HUD approved a $13,357 withdrawal from the account. The funds were transferred to the operating account in March 2020 and again in August 2020. Altogether, a total of $37,112 is due to the replacement reserve account. Criteria: The regulatory agreement requires that $428 be deposited in the replacement reserve account each month from January 2022 through December 2022. In addition, funds can only be withdrawn from the account with approval from HUD. Cause: The required deposits were not transferred from the operating account to the replacement reserve account for four months of the year because HUD did not pay the Housing Assistance Payment (?HAP?) voucher funds. The current management company is making replacement reserve deposit if and when HUD pays the monthly HAP voucher. Possible Asserted Effect: The replacement reserve was underfunded by $3,424 for the year ended December 31, 2022. The replacement reserve was also underfunded by $3,852, $5,136, $5,136, and $3,919 for the years ended December 31, 2021, 2020, 2019, and 2018, respectively. In addition, the operating account owes the replacement reserve account $4,000 for a loan in 2021 that has not been repaid, and $13,357 due to a duplicate transfer of funds in 2020. The cumulative total due to the replacement reserve fund is $37,112. Repeat Finding: This finding was reported in the immediately prior audit as Finding 2021-001. Recommendation: The overall reserve shortage of $37,112 should be funded as soon as possible. Management should consider requesting a replacement reserve deposit waiver for the prior year payments and or a rent increase from HUD. Management Response: The management company is making replacement reserve payments when HUD pays the HAP voucher. The Project was able to make three monthly payments for 2021 and eight for 2022. Management will transfer additional funds from operating to reserve when cash is available. The Project?s goal is be able to pay the current monthly replacement reserve deposit. The amounts due from prior years cannot be funded at this time.