Finding Text
Underfunding of Replacement Reserve Significant Deficiency in Internal Control over Compliance and an Immaterial Instance of Noncompliance Criteria - Management is required to monitor and increase the deposits as required by HUD. Condition - During our testing, we identified that the Organization did not increase the monthly deposit to the replacement reserve timely as well as missed one month. The replacement reserve was under funded by $1,555 as of September 30, 2025. Cause - The Organization's review and oversight of the changes in monthly deposits was not operating effectively to ensure that the correct amount was deposited. Effect - This could cause the replacement reserve to be underfunded and in noncompliance with the regulatory agreement. Recommendation - We recommend that management have in place controls to ensure that the required monthly deposits be updated timely. View of Reponsible Officials - Management agrees with this finding.