Finding Text
Material Weakness – Reserve for Replacement Criteria The Program is required to make monthly deposits to a Reserve for Replacement account in accordance with their regulatory agreement. Condition: The Program did not comply with requirement related to deposits into the reserve for replacement account. The Program made three of twelve deposits in the current year, the required deposits in to the reserve for replacement account for the year ended June 30, 2024 were $18,024 and only $4,506 was deposited. Per review of required deposits, the ending balance as of June 30, 2024 should be $144,403. Cause: The Program had turnover in staff and missed making monthly deposits into the reserve account. Questioned Costs: Not Applicable. Effect: Non-compliance with Reserve for Replacement requirements. Repeat Finding: No. Recommendation: The Program should implement controls to ensure monthly deposits are being made as required. Response: Management will request a waiver from HUD to cease deposits to the RFR Account until such time that the account falls before the HUD recommended minimum required deposits.