Finding Text
U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.134 Mortgage Insurance Rental Housing Project Number: 091-11022 HUD Regulatory Agreement Dated July 1, 2016 Special Test and Provisions: Replacement Reserve Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: The Project’s regulatory agreement with HUD requires monthly deposits into the replacement reserve. Condition: The Project made twelve monthly deposits into the replacement reserve account; however, the deposits were not at the amount identified and required by HUD. Cause: The increase in the monthly deposit for the replacement reserve was overlooked by management due to employee turnover and knowledge of the required deposits. Effect: The Project underfunded its replacement reserve by $4,962 which includes $1,140 as it relates to the year ended December 31, 2024. Questioned Costs: None Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend the Project transfer $4,962 to its replacement reserve. Views of Responsible Officials: Management agrees with the finding and the recommendation.