Finding Text
Identification of the federal program AL #14.181, Department of Housing and Urban Development, Section 811 Capital Advance 2015 • Criteria The compliance supplement states that "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 interestbearing 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 section 891.405)." • Condition As of December 31, 2024 the account maintained at a federally insured depository is not interest bearing. • Cause The Project did not verify that the account was interest bearing at the time it was opened and has not corrected this error. • Effect or potential effect The Project is not in compliance with the requirements set forth by HUD related to its reserve for replacement account. • Questioned costs None • Identification as a repeat finding This is a repeat finding. • Recommendation The Project should transfer its reserve for replacement balance to a new account within a federally insured financial institution which is interest bearing. • Views of responsible officials The Organization’s agrees with this finding and has implemented additional accounting policies and procedures, as well as staffing changes, in order to correct these issues. See the response included in the Corrective Action Plan.