Finding Text
Finding 2024-004: Monthly Deposit into Reserve for Repairs and Replacements- Significant Deficiency Assistance Listing No: 14.195 Section 8 Housing Assistance Payments Program Federal Agency: U.S Department of Housing and Urban Development Passed-Through Agency: NA Award Number: NA Award Year: 2024 Compliance Requirement: Special Tests Criteria: An amount as required by HUD or the state agency for 24 CFR Part 883 projects, as applicable, shall be deposited monthly in the reserve fund in accordance with the Regulatory Agreement or HAP contract (24 CFR sections 880.601, 880.602, 881.601 and 883.701).The Project is required to make monthly deposits into their reserve for repairs and replacement account in accordance with their mortgage agreement and HUD. Condition: During our testing, we noted the Project did not submit one of the required monthly deposits during the year. Cause: The payment for the reserve for repairs and replacement account was paid with the mortgage after year end. Effect or Potential Effect: The reserve for repairs and replacement account was underfunded by year end, therefore the Project is not incompliance with Uniform Guidance and HUD. Questioned Cost: $1,812.50 was underfunded to the reserve for repairs and replacement for the year ended May 31, 2024. Recommendations: We recommend that management have a policy in place to review cash transfers to ensure required deposit guidelines are satisfied each year on a timely basis.