Finding Text
Finding No. 2025-001 Program: Rural Rental Housing Loans Federal Assistance Listing No.: 10.415 Federal Grantor: Department of Agriculture Statement of Condition: As of June 30, 2025, Sharon Ridge Expansion Corporation is eight months behind in deposits to the replacement reserve. Criteria: USDA requires that the replacement reserve account be maintained in a separate account, with monthly deposits made as required and that USDA approval is required prior to any withdrawals. Effect: Noncompliance with USDA Regulations. Cause: The project has cash flow issues. Context: Review of the deposits to the replacement reserve account showed that eight deposits had not been made for the year ended June 30, 2025. This is a repear finding from fiscal year June 30, 2024; see finding 2024-001. Recommendation: Management should ensure that required monthly deposits are made to the replacement reserve account. Management’s Response and Corrective Action Plan: We agree with the finding. Sharon Ridge Expansion Corporation is experiencing cash flow issues and is working to remedy the shortfall.