Audit 413727

Finding 2023-001 – Special Tests and Provisions – Replacement Reserve Account Federal program information: Title: Supportive Housing for the Elderly (Section 202) CFDA Number: 14.157 Resolution Status: In Process Information on Universe Population Size: Population size is all transactions in the replacement reserve account for the year ended December 31, 2023. Sample Size Information: Tested 100% of transactions (10 deposits and 3 withdrawals). Identification of Repeat Finding and Finding Reference Number: Finding 2021-001 and Finding 2022- 001 both involve the reserve fund. Finding 2021-001 involves a transfer out of the fund, Finding 2022- 001 was due to an omitted required reserve deposit. Criteria: The Regulatory Agreement dated February 6, 2012 requires Pine Meadows to make a monthly deposit to the reserve fund for replacements that is maintained in a separate account. Disbursements from this fund are to be made only after receiving consent in writing from the Department of Housing and Urban Development (HUD). Statement of Condition: During the year-ended December 31, 2023 Pine Meadows made a total of $27,697.92 of distributions from the reserve fund. The Organization determined a distribution of $1,469.00 was inadvertently included twice in requests for distributions, and thus not approved for withdrawal. In addition, although Pine Meadows did make all required deposits, they were not transferred timely in all cases. Cause: Management did not adequately verify authorization was received prior to making the distribution. Recommendation: We recommend Pine Meadows require verification of HUD approval of distributions from the reserve funds prior to making any withdrawals from the account.