Finding 1147927 (2024-001)

U.S. Department of Housing and Urban Development CFDA #: 14.157 – Supportive Housing for the Elderly Other Matter/Significant Deficiency Criteria In accordance with HUD regulations, Owners shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally insured depository in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD will be deposited monthly in the reserve fund (Regulatory Agreement, item 5 A). All disbursements from the reserve must be approved by HUD (24 CFR sections 891.405 and 891.605). Condition The Organization did not make all of the required monthly deposits into the replacement reserve account. The Organization has delinquent deposits to reserve for replacement account in the amount of $35,642. Cause The Organization does not generate sufficient cash flow to make the required monthly deposits. Questioned Costs None identified. Context The Organization is required to make monthly deposits into the reserve for replacement account based on an amount as required by HUD. Effect or Potential Effect The Organization’s reserve for replacement account is not sufficiently funded. Repeat Finding No Recommendation Management should review the Organization’s budget to ensure that the replacement reserve is funded in accordance with HUD regulations. Auditee’s Response and Planned Corrective Action See Corrective Action Plan.