Finding Text
Federal agency: U.S. Department of Housing and Urban Development
Federal program title: Section 202 Capital Advance
Assistance Living Number: 14.157
Type of Finding:
Significant Deficiency in Internal Control over Compliance
Compliance
Criteria or Specific Requirement: Internal controls should be in place to ensure that the HUD required deposits are made in a timely manner into the replacement reserve account.
Condition: Management is responsible for reviewing and reconciling the replacement reserve account on a monthly basis ensuring all required deposits are made.
Questioned Costs: $937.50
Context: While performing audit procedures, it was noted that the required monthly deposit of $937.50 was not made for all 12 months of the fiscal year. Noted one month of deposits missing.
Cause: Management did not make the monthly required deposit into the replacement reserve account for all 12 months of the fiscal year.
Effect: The replacement reserve account balance is understated to what it should be as of September 30, 2024 with the necessary deposits.
Repeat Finding: N/A
Recommendation: The Corporation should review the policy surrounding the procedures regarding the replacement reserve deposits made on a monthly basis. Also, management should make an additional deposit during the fiscal year ending September 30, 2025, in addition to the 12 required deposits, to ensure the replacement reserve account is properly funded.
Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding and management will make an additional deposit during the fiscal year ended September 30, 2025 to ensure the proper funding of the replacement reserve account.