Finding 1216354 (2025-002)

Finding Reference Number: 2025-02 Title and Number of Federal Program: Section 202 Capital Advance and PRAC, 14.157 Type of Finding: Federal Award Finding Finding Resolution Status: In Process Information on Universe Population Size: n/a Sample Size Information: n/a Identification of Repeat Finding and Finding Reference Number: n/a Criteria: The Corporation is responsible for establishing and maintaining policies and procedures to ensure the timely funding of replacement reserves and repayment of HUD replacement reserve loans, in accordance with HUD requirements. Statement of Condition: HUD replacement reserve loans were not repaid in a timely manner, and monthly replacement reserve deposits were not funded consistently. Cause: Management did not have adequate procedures in place to ensure the timely repayment of HUD replacement reserve loans and the consistent funding of replacement reserve deposits. Effect or Potential Effect: Noncompliance with HUD loan terms and replacement reserve deposit requirements. Auditor Non-Compliance Code: N - Reserve for replacement deposits Questioned Costs: $34,195 Reportable Views of Responsible Officials: Management agrees with the finding, and the loans will be repaid as soon as funds are available and management will ensure timely funding of the replacement reserve going forward. Context: n/a Recommendation: We recommend that management should review and strengthen policies and procedures related to the repayment of HUD loans and the timely funding of replacement reserve deposits. Auditors’ Summary of the Auditee’s Comments on the Findings and Recommendations: Agree with management's assessment. Response Indicator: Agree Status Indicator: Unresolved Completion Date: 12/31/2025 Response: Policies and procedures will be reviewed to ensure that HUD loans are repaid in accordance with the required payment terms and that replacement reserve deposits are funded consistently.