Finding Text
Criteria: The Organization is required to make monthly deposits to a reserve for replacements account which is to be used for replacements to structural elements or mechanical equipment in the facility. Statement of Condition: The Organization did not make all of its required monthly deposits during the year. Cause of condition: The Organization received notice of approval to increase the required reserve deposit effective February 1, 2025 in March 2025 before year end. The Organization had made the required deposits based on the previously required amount but did not make the additional deposits required based on the approval of new rate. Effect of condition: The reserve for replacement did not receive all the deposits required by the Regulatory agreement. Recommendation: The design of the current controls should be reviewed to ensure that all required monthly deposits are made to the reserve for replacement. The Organization should ensure that funds are deposited to the reserve to correct the shortage. Views of Responsible Officials: Management agrees with the finding and will implement procedures to ensure that all required deposits are made to the reserve for replacement. A deposit has been made to correct this shortage.