Finding Text
Finding 2021-007 – Special Tests and Provisions – Material Weakness
Name of Federal Agency: Department of Housing and Urban Development
Federal Program Name and Assistance Listing Number: Supportive Housing for Persons with Disabilities (Section 811), Assistance Listing 14.181
Federal Award Identification Number and Year: N/A and 1997
Name of Pass-through Entity: N/A
Criteria
The regulatory agreement requires that the project make monthly deposits to its replacement reserve.
Condition
During the year ended September 30, 2021, the project did not make the required monthly deposits to the replacement reserve in the amount of $6,563. The project is required to make monthly deposits to the reserve in the amount of $1,313.
Cause
Management did not have internal controls in place to ensure required deposits were made to the replacement reserve.
Effect or Potential Effect
Failure to make monthly payments resulted in an underfunding the replacement resere and a violation of the regulatory agreement.
Questioned Costs
None.
Context
See the context of the finding detailed in the condition section above.
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendation
Management should review the project budget to determine if nonessential costs can be cut or request a loan from the sponsor to ensure that the replacement reserve is funded in accordance with the terms of the regulatory agreement.
Auditor Noncompliance Code: Z- Other
Finding Resolution Status: Unresolved.
Views of Responsible Officials
HES agrees with the finding and the auditor's recommendations will be adopted