Finding Text
Finding 2023-001- Replacement Reserve Deposits
Federal Agency U. S. Department of Housing and Urban Development
Pass through Entity Not applicable
Program Name: Section 811 Capital Advance Program
CFDA# and Program Expenditures: 14.181 ($1,616,600)
Federal Award Year July1, 2022 to June 30, 2023
Questioned Costs 5,700
Condition Found Monthly deposits were not made to the replacement reserve account as required by the Project’s regulatory agreement. Monthly deposits of $475 were required, however there is no evidence that they were made.
Criteria: The regulatory agreement requires that $475 is deposited in the replace reserve account each month from July 2022 to June 2023.
Cause The required deposits were not transferred from the operating account to the replacement reserve account on a monthly basis.
Effect: The Project did not follow the regulatory agreement. The replacement reserve account did not earn as much interest income as it possibly could have if the deposits were made monthly.
Repeat Finding In fiscal years 2022 and 2021, the replacement reserve deposits were not made.
Recommendation: The Project should create an automatic monthly transfer of $475 from the operating account to the reserve replacement account.
Management’s response Agrees with the recommendation