Finding Text
Condition/Context
At December 31, 2021, deposits to the reserve for replacements account in a cumulative amount of $3,305 have not been made.
Criteria
Pursuant to Section 5(a) of the Regulatory Agreement, the Corporation shall establish and maintain a reserve fund for replacements and deposit an amount equal to $1,377 per month unless a different date or amount is approved in writing by HUD. The Corporation failed to make the required deposits to the reserve for replacements fund.
Effect or Potential Effect
The Corporation is not in compliance with the Regulatory Agreement.
Cause
Due to operating cash flow shortages, the required monthly deposits to the reserve for replacements are not being made.
Identification as a Repeat Finding
2020-003
Recommendation
Management should transfer excess funds from the operating account to the reserve for replacements account and continue to work toward bringing the delinquent accounts current.
Questioned Costs
$3,305
Auditor Noncompliance Code: N - Reserve for Replacements Deposits
Finding Resolution Status
Open.
Reporting Views of Responsible Officials
Management will transfer excess funds from the operating account to the reserve for replacements account to catch up delinquency. Additionally, management will be sure to make all deposits going forward.