Finding Text
Finding 2025-001 - Special Tests and Provisions U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria: The regulatory agreement requires that the project make monthly deposits to its replacement reserve. Condition: During the year ended September 30, 2024, the Project failed to make two required monthly deposits to the replacement reserve totaling $5,464. The required monthly deposit is $2,732. During the year ended September 30, 2025, the Project made a payment for one of the prior-year missed deposits but did not make the remaining prior-year missed deposit. Cause: The Project inadvertently deposited the funds into another entity's cash account. The other entity repaid the Project, however, the Project management did not remit the funds to the replacement reserve upon receipt. Effect or Potential Effect: Failure to make monthly payments resulted in an underfunding of the replacement reserve and a violation of the regulatory agreement. Questioned costs: $2,732 Context: The Project failed to make the required prior-year monthly deposits to the replacement reserve during the year ended September 30, 2025, resulting in an underfunding of $2,732. This represents a violation of the regulatory agreement. Identification as a Repeat Finding: Yes. See 2024-002 Recommendation: Management should implement procedures to ensure the funds are deposited into the correct account and to ensure that the replacement reserve is funded in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code: N - Reserve for replacements deposits Finding Resolution Status: In Process. Reporting Views of Responsible Officials: North TX A/C refunded two months deposit of $5,464 to the property as of September 30, 2025. One month deposit was correctly deposited into the replacement reserve account, the second missed deposit was not deposited into the replacement reserve account.