Finding 1138564 (2024-003)

2024-003 Program: 10.447 – Multi-Family Housing Revitalization and Demonstration Program Description: Inadequate Reserve Funds Condition: During our testing of reserve balances to comply with requirements of the debt service agreement, it was noted that the reserve balance did not comply with the minimum amount required. Criteria: Requirement 7 CFR 3560 states that the Housing Authority shall establish and maintain on its books a reserve account as long as the loan obligations remain unsatisfied. This reserve account requires deposits of stated amounts until the reserve account reaches the sum of $350,000. Use of funds deposited to the account will be in accordance with 7 CFR 3560 or any successor regulation. As of August 31, 2024, the required balance in the reserve account was $167,521. The actual reserve account balance was $108,417. Cause: Expenditures from the reserve account. Effect: Insufficient reserve account balances could effect future borrowings and the Housing Authority’s ability to perform required maintenance or facility improvements. Recommendation: It is important that management remain aware of the required balance in the reserve account and transfer appropriate funds to remain in compliance with debt agreements. Identification of a Repeat Finding: This is a repeat finding from previous audit. See 2023-003. Views of Responsible Officials: See attached corrective action plan.