Finding Text
Criteria: Pursuant to the Regulatory Agreement, the Project was required to deposit $5,836 into the replacement reserve account on a monthly basis. Condition: The management company did not deposit all monthly replacement reserve deposits totaling $39,257 underfunded during the current fiscal year. Questioned Costs: $39,257. Cause: Management company failed to comply with the replacement reserve funding requirement. Effect: The underfunding of replacement reserve account by the management company resulted in the Project not to be in full compliance with its Regulatory Agreement. Recommendation: Management should enhance its internal controls to ensure management company’s compliance with replacement reserve account. Management Response: See Management’s Corrective Action Plan on page 34.