Finding Text
2023-001
Federal agency: Department of Housing and Urban Development
Federal program: Section 811 - Supportive Housing for Persons with Disabilities
CFDA Number: 14.181
Type of Finding:
• Material Weakness in Internal Control over Compliance
• Compliance – Material
Criteria or Specific Requirement: Deposits to the Replacement Reserve should be made on a monthly basis.
Condition: Monthly deposits of $5,000 per month for 2022 and $6,000 per month for 2023 should be made into the Replacement Reserve account. The deposits were only made for 7 months in 2022 and 1 month for 2023.
Questioned Costs. $91,000
Context: Procedures were performed to test the activity in the Replacement Reserve account for 2023, which determined that the proper deposits were not made through 2023.
Cause: Controls were not followed to ensure that the proper amounts were being deposited into the Replacement Reserve account.
Effect: The Replacement Reserve account is under funded by $91,000.
Repeat Finding: Yes.
Recommendation: The Project should deposit the $91,000 into the Replacement Reserve account as soon as possible.
Views of Responsible Officials and Corrective Action: In March 2024, management deposited $69,000 into the Replacement Reserve. Management intends to deposit the $22,000 withing the next week. A monthly process has been established to insure that the monthly required deposits to the Replacement Reserve are made on a current basis.