Finding Text
2023-2 Reserve for Replacement Deposits Not Made or Not Made Timely
2023-2 Reserve for Replacement Deposits Not Made Timely or Not At All
Condition: The Project did not make the required deposits into the bank account on a monthly basis. There were 11 deposits made during the 2023 year.
Criteria: According to the Regulatory Agreement, “mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank…Concurrently with the effective commencement of rental assistance payments under the Project Rental Assistance Contract, the Mortgagor will deposit an amount…per month unless a different date or amount is approved in writing by HUD”.
Cause: The cause is undeterminable.
Effect: The Project is not in compliance with the Regulatory Agreement. The cash balance was overstated by $1,076 related to deposits that were never made to this account. The balance was corrected during the audit.
Recommendation: I recommend the Property make required monthly deposits according to the Regulatory Agreement.