Finding Text
The regulatory agreement requires that the project make monthly deposits to its replacement reserve. Condition During the year ended June 30 2025, the project did not make the required monthly deposits to the replacement reserve in the amount of $66,540. The project is required to make monthly deposits to the reserve in the amount of $5,545. Cause The project does not generate sufficient cash flow to make the required monthly deposits. Effect or Potential Effect Failure to make monthly payments resulted in an underfunding of the replacement reserve and a violation of the regulatory agreement. Questioned Costs $11,090 Identification as a Repeat Finding This is a repeat finding. Recommendations Management should review the project budget to determine if nonessential costs can be cut to ensure that the replacement reserve is funded in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code: N. Reserve for replacements deposits View of Responsible Officials Management agrees with the findings and recommendations, will transfer the replacement reserve funds. Monthly deposits will be completed in accordance with HUD going forward to ensure all terms and conditions are met. Finding Resolutions Status: Unresolved