Finding 1132425 (2024-001)

FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAM AUDIT 2024-01: Late Monthly Deposit to Replacement Reserve Statement of Condition: The Project is required by HUD to make monthly deposits to the replacement reserve in an amount prescribed by HUD. Payments for a portion of the year were lower than the required deposits. The Project corrected the shortfall during 2024 and began making the required deposits. Criteria: The Project is required by HUD to make monthly deposits to the replacement reserve in an amount prescribed by HUD. Effect: The Project was not in compliance with HUD requirements regarding monthly deposits to the replacement reserve. Cause: The Project made monthly deposits to the replacement reserve using the previous HUD communicated amount and did not update the deposit with the new amount. Questioned Costs: None Recommendation: We recommend the Project strengthen procedures to ensure updates to the monthly replacement reserve deposits are made in the correct amount. Views of Responsible Officials: Management concurs with the finding and recommendations. Auditor’s Summary of Auditee’s Comments: The Project didn’t timely update its monthly replacement reserve deposit, but had corrected it during the year. Management concurs with the finding and recommendations. Management’s Response: Management concurs with the finding and recommendations. Management has implemented additional procedures to ensure the monthly deposit to the replacement reserve is timely updated.