Finding 1100949 (2024-001)

Assisted Listing Number/Federal Program/Granting Agency: 10.415 Criteria: The Organization must have adequate controls over replacement reserve in place to ensure accurate and timely deposits are executed to the reserve accounts. Statement of Condition: As part of our review of replacement reserve accounts required by RD, we noted there were 3 properties, Carson Springs, White Caps, and Wy East, which were inadequately funding RD required replacement reserve accounts during the year. The RD properties Carson Springs, White Caps, and Wy East were underfunded by $9,100, $11,500, and $16,034, respectively during 2024. Questioned Costs: It is not practicable to estimate questioned costs. Cause: Management failed to request abatement of RD replacement reserve deposits for three properties. Two of the properties (Carson Springs and White Caps) made no deposits during the year, and one property, Wy East Vista, only had 5 deposits during the year. The failure to request abatement or decrease in the reserve deposits resulted in underfunded RD replacement reserves. Effect or Possible Effect and Perspective: The replacement reserve accounts are underfunded for 3 of the properties (Carson Springs, White Caps, and Wy East), properties are out of compliance with RD replacement reserve account required deposits. The replacement reserves may not have sufficient funds to maintain repair costs. Repeat Finding: Not a repeat finding. Recommendation: We recommend the Organization request from RD an a reduction in deposit amounts for properties struggling for cash, or an entire pause of deposits. We recommend the Organization receive approval from RD prior to reducing or stopping any RD replacement reserve deposits. Views of Responsible Officials: Paula Maden, agrees, via the corrective action plan.