Finding Text
Criteria
During the year ended June 30, 2024, the project did not make the required monthly deposits to the
replacement reserve. A catch-up deposit was made for 6 months of at once, however the deposit
was short by $13,378.
Condition
The regulatory agreement requires that the project make monthly deposits.
Cause
The project did make the required monthly deposits during the initial management company
change.
Effect or Potential Effect
Failure to make monthly payments resulted in an underfunding of the replacement reserve and a
violation of the regulatory agreement.
Questioned Costs
$13,378
Identification as a Repeat Finding
This is not a repeat finding.
Recommendations
Management should ensure that the replacement reserve is funded in accordance with the terms of
the regulatory agreement.
Auditor Noncompliance Code:
N. Reserve for replacement deposits.
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for replacement reserve funding. Funds have been transferred and will maintain HUD policy of
monthly deposits to the replacement reserve.
Finding Resolution Status:
Resolved