Finding 1074558 (2024-001)

U.S. Department of Housing and Urban Development Finding 2024.001, CFDA #14.157 Section 891.405(b) – Replacement Reserve Condition: As of June 30, 2024, the replacement reserve account was underfunded by $357. Beginning in February of 2024, the increase in the monthly required deposit amount was inadvertently not made and the required amount from January 2024 continued to be paid throughout fiscal 2024. This caused the annual replacement reserved to be underfunded by $357 at June 30, 2024. Criteria: The Project’s regulatory agreement required deposits of $1,471.42 be made in the replacement reserve account beginning in February of 2024. Cause: Management did not update the financial institution for the increased deposit requirement. Effect: This caused the annual replacement reserved to be underfunded at June 30, 2024, by $357. Recommendation: Management should deposit $357 into the replacement reserve account and ensure that monthly deposits are made in the correct amount. View of Responsible Officials: Management transferred $357 to the replacement reserve account in July 2024. Management will monitor monthly replacement reserve deposits in the future and will notify the financial institution of future increases.