Finding Text
Criteria: The Project shall make monthly deposits to the replacement reserve in accordance with its
Capital Advance Regulatory Agreement.
Statement of Condition: The Project was delinquent in making the required monthly contributions to
the replacement reserve.
Cause: The previous management agent did not perform the annual certifications within the time
frame required. As a result, the subsidy was not received for a period of fourteen months. The
property was unable to remit the replacement reserve deposits until the subsidy was received.
Effect or Potential Effect: The Company is not in compliance with its Capital Advance Regulatory
Agreement.
Recommendation: Management has designed and implemented internal controls to ensure that
deposits are made timely to the replacement reserve.
Management’s Response: Management agrees with the auditors’ finding and recommendation.