Finding 1152165 (2024-001)

Finding 2024-001 - Significant deficiency in Internal Control over financial reporting due to not making the required replacement reserve deposits. Federal Program: Supportive Housing for the Elderly (Section 202) ALN: 14.157 Federal Agency: U.S. Department of Housing and Urban Development (HUD) Criteria: Corporation management is responsible for maintaining effective internal controls over financial reporting to ensure the accurate and timely submission of financial transactions, including monthly replacement reserve deposits. Condition: During the 2024 audit, it was noted that the property did not make all of the required monthly replacement reserve deposits. Questioned Costs: $24,665 Cause: The significant deficiency was due to lack of internal controls over the financial reporting process related to the timely deposits to the replacement reserve account. Effect: As a result of the significant deficiency the 2024 replacement reserve account was not properly funded. Recommendation: The Corporation should ensure that there are proper internal controls in place over financial reporting to ensure accurate and timely submission of financial transactions, including monthly replacement reserve deposits. Management Comments: We agree with the facts and circumstances of this finding and will increase the internal controls over financial reporting. The replacement reserve account was fully funded in 2025. Auditor Noncompliance Code: N - Reserve for Replacement Deposits