Finding Text
Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Program Name: Supportive Housing for Persons with Disabilities (Section 811) Assistance Listing Number: 14.181 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Reserve for replacement funds and project funds were not maintained in interest bearing bank accounts. Condition: During the 2025 audit, we noted that the reserve for replacement and project funds bank accounts were deposited into non-interest bearing accounts. Questioned Costs: None. Context: Bank reconciliations tested identified that the reserve for replacement and project fund accounts were in non-interest bearing bank accounts. Cause: Due to change in management company during 2024, the Project changed its bank accounts. Effect: The Project did not properly deposit the reserve for replacement funds and project funds accounts into interest bearing accounts. Repeat Finding: None. Recommendation: We recommend withdrawing the reserve for replacement funds and project funds and depositing into interest bearing accounts. Views of Responsible Officials: We agree with the above recommendation. During fiscal 2026, the funds were withdrawn and deposited into interest bearing accounts.