Finding Text
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157
Award Period: January 1, 2024 through December 31, 2024
Type of Finding:
-Significant Deficiency in Internal Control over Compliance
-Other Matters
Criteria or specific requirement: HUD requires deposits to be made timely to the replacement reserve on a monthly basis unless suspension of the monthly deposit is approved by HUD.
Condition: The required replacement reserve deposit for the month of June 2024 was not made. HUD provided approval for suspension of replacement reserve deposits for the 4-month period of July 2024 through October 2024. Deposits were not made to the replacement reserve for the 5-month period June 2024 through October 2024.
Questioned costs: None
Context: The Organization made seven deposits to the replacement reserve escrow during the period under audit. The Organization obtained approval from HUD for suspension of 4 months of deposits (July 2024 - October 2024) and therefore 8 deposits should have been made to the replacement reserve during the year. The required replacement reserve deposit for the month of June 2024 was not made.
Cause: Due to a miscommunication, the June 2024 replacement reserve deposit was not made.
Effect: There were no negative effects to the Organization.
Repeat Finding: No.
Recommendation: We recommend that the Organization make the missed deposit to the replacement reserve escrow and establish internal controls to ensure required replacement reserve deposits are made in a timely manner.
Views of responsible officials: There is no disagreement with the audit finding. The missed June 2024 replacement reserve deposit was made on March 11, 2025.