Finding Text
Criteria Any withdrawal from the replacement reserve account requires HUD approval in accordance with the HUD regulatory agreement. Condition During the year ended December 31, 2025, management withdrew $3,169 from the replacement reserve account without HUD approval. Cause The amount was withdrawn from the replacement reserve account in error. Effect or Potential Effect The withdrawal of $3,169 is an unauthorized withdrawal from the replacement reserve account. Questioned Costs $3,169 Context Isolated instance which was not part of a statistical sample. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation Management should immediately deposit $3,169 into the replacement reserve account. Auditor Noncompliance Code: A - Unauthorized withdrawals from replacement reserve account Finding Resolution Status: In-process Views of Responsible Officials On March 4, 2026, management corrected this issue by depositing $3,169 into the replacement reserve account. Furthermore, management has implemented a strengthened internal control process requiring a three-level review and approval of all replacement reserve withdrawals. Specifically, the Vice President of Operations, Regional Manager, and Controller must each review and approve the request prior to any transfer of funds to ensure compliance with HUD approved withdrawals.