Finding Text
Finding Number: 2023-001 REPLACEMENT RESERVE DEPOSITS
Program Title: Section 8 Housing Assistance Payments Program
Name of Federal Agency: U. S. Department of Housing and Urban Development (HUD)
CFDA Number: 14.195
Criteria
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 funds. All disbursements from the reserve must be approved by
HUD, (24 CFR section 891.405 and 891.605).
Condition
The Project deposited the required February 2023 monthly amount during March 2023.
Cause
The Project had a problem with its internet connection, so based on the premise that it is in
compliance with HUD, it decided to make the deposit in March.
Effect
The Project failed to make the corresponding deposit in the month of February 2023 and later
deposited on March 2023 affecting interest earned on those deposits. Questioned cost
None since the deposit was made in March 2023.
Context
Condition observed on one of the twelve deposits required by the Regulatory Agreement.
Prior year finding
No
Recommendation
Management should monitor monthly the activity of the replacement reserve account, and tenant’s
security deposit account. Required deposits should be made to the correct account on a monthly
basis to avoid deficiencies in the reserve account balance.