Audit 45939

Finding 2022-001 Criteria: The establishment and maintenance of a general operating reserve fund is a program requirement applicable to cooperative housing insured by HUD. Monthly payments of not less than 3% of the monthly charges to members are required. Upon accrual of an amount equal to 15% of the current annual charges to members, the rate may be reduced from 3% to 2% provided the total of the operating reserve does not fall below 15% of annual charges. Upon the operating reserve reaching 25% of the annual charges, payments into the reserve may be discontinued so long as the 25% level is maintained. If the level falls below 25%, monthly deposits of 3% of monthly charges shall commence until the 25% level is restored. Condition: The Cooperative did not adequately fund the general operating reserve at 3% of the member carrying charges. Questioned Costs: None. Context: The Cooperative did not adequately fund the general operating reserve. Effect: The Cooperative is out of compliance with the HUD regulatory agreement. Cause: The Cooperative?s deposits into the general operating reserve did not meet the 3% of the member carrying charges. Repeat Finding: N/A. Recommendation: We recommend that the Cooperative immediately transfer into the general operating reserve the amount needed to come back into compliance. Current Status: Resolved, the Cooperative made the transfer into the general operating reserve after year-end. Action Taken: The Cooperative will make the transfer. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the corrective action plan on page 27 in this audit report.

Finding 2022-002 Criteria: The establishment and maintenance of a general operating reserve fund is a program requirement applicable to cooperative housing insured by HUD. Disbursements totaling not in excess of 20% of the total balance in the reserve as of the close of the preceding annual period may be withdrawn by the Cooperative without the approval of HUD. Condition: The Cooperative did not receive HUD?s permission to withdraw more than 20% of the funds in their general operating reserve account. Questioned Costs: None. Context: The Cooperative did not receive approval from HUD to withdraw funds in excess of the agreed upon 20% limit. Effect: The Cooperative is out of compliance with the HUD regulatory agreement. Cause: The Cooperative did not receive HUD?s approval to withdraw funds in excess of the allowable 20%. Repeat Finding: N/A. Recommendation: We recommend that the Cooperative replace the excess funds withdrawn from the general operating reserve and not withdraw funds in excess of the 20% without first receiving approval from HUD in the future. Current Status: Resolved, the Cooperative replaced the excess funds withdrawn to the general operating reserve after year-end. Action Taken: The Cooperative will replace the excess funds withdrawn. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the corrective action plan on page 27 in this audit report.

Finding 2022-001 Criteria: The establishment and maintenance of a general operating reserve fund is a program requirement applicable to cooperative housing insured by HUD. Monthly payments of not less than 3% of the monthly charges to members are required. Upon accrual of an amount equal to 15% of the current annual charges to members, the rate may be reduced from 3% to 2% provided the total of the operating reserve does not fall below 15% of annual charges. Upon the operating reserve reaching 25% of the annual charges, payments into the reserve may be discontinued so long as the 25% level is maintained. If the level falls below 25%, monthly deposits of 3% of monthly charges shall commence until the 25% level is restored. Condition: The Cooperative did not adequately fund the general operating reserve at 3% of the member carrying charges. Questioned Costs: None. Context: The Cooperative did not adequately fund the general operating reserve. Effect: The Cooperative is out of compliance with the HUD regulatory agreement. Cause: The Cooperative?s deposits into the general operating reserve did not meet the 3% of the member carrying charges. Repeat Finding: N/A. Recommendation: We recommend that the Cooperative immediately transfer into the general operating reserve the amount needed to come back into compliance. Current Status: Resolved, the Cooperative made the transfer into the general operating reserve after year-end. Action Taken: The Cooperative will make the transfer. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the corrective action plan on page 27 in this audit report.

Finding 2022-002 Criteria: The establishment and maintenance of a general operating reserve fund is a program requirement applicable to cooperative housing insured by HUD. Disbursements totaling not in excess of 20% of the total balance in the reserve as of the close of the preceding annual period may be withdrawn by the Cooperative without the approval of HUD. Condition: The Cooperative did not receive HUD?s permission to withdraw more than 20% of the funds in their general operating reserve account. Questioned Costs: None. Context: The Cooperative did not receive approval from HUD to withdraw funds in excess of the agreed upon 20% limit. Effect: The Cooperative is out of compliance with the HUD regulatory agreement. Cause: The Cooperative did not receive HUD?s approval to withdraw funds in excess of the allowable 20%. Repeat Finding: N/A. Recommendation: We recommend that the Cooperative replace the excess funds withdrawn from the general operating reserve and not withdraw funds in excess of the 20% without first receiving approval from HUD in the future. Current Status: Resolved, the Cooperative replaced the excess funds withdrawn to the general operating reserve after year-end. Action Taken: The Cooperative will replace the excess funds withdrawn. Views of Responsible Officials and Planned Corrective Actions: The Cooperative agrees with this finding and will adhere to the corrective action plan on page 27 in this audit report.