Finding Text
Federal Agency: U.S. Department of Housing and Urban
Federal Program Title: Section 202 Capital Advance
Federal Assistance Listing Number: 14.157
Federal Award Identification Number and Year: MN46S971002 - 1997
Pass-Through Agency: N/A
Pass-Through Number(s): N/A
Award Period: July 1, 2023 through December 31, 2023
Type of Finding:
Material Weakness in Internal Control over Major Federal Programs
N - Replacement Reserve Deposits
Criteria or Specific Requirement: Management is responsible for maintaining required monthly deposits into the Replacement Reserve account in accordance with form HUD-9250.
Condition: The project did not make the correct monthly deposit that was required in order to be in compliance with HUD for the year under audit.
Questioned Costs: $ 61,461
Cause: There was a significant increase to the required monthly deposits to the replacement reserve when the rent increased in July 2023. The monthly deposits were not increased as required.
Effect: The Replacement Reserve escrow balance was underfunded by $61,461 at December 31, 2023.
Repeat Finding: Yes
Recommendation: Management should implement a process to ensure the required monthly deposit into the Replacement Reserve is in accordance with form HUD-9250.
Views of Management: There is no disagreement with the audit finding.
The Project made a deposit to correct the deficiency in the replacement reserve as follows: $11,321 on 1/1/24; $40,740 on 1/16/24; $10,000 on 2/11/24.