Finding Text
Finding Number 2025-002 In Process Federal Agency U.S. Dept. of Housing and Urban Development Federal Program Name Section 202 Capital Advance Assistance Listing Number 14.157 Federal Award Identification Number and Year MN46S931002 - 1993 Award Period 2025 Compliance Requirement Affected N - Reserve for Replacements Deposits Type of Finding Significant Deficiency in Compliance and Internal Control over Major Federal Program Criteria Management is responsible for maintaining required monthly deposits into the Replacement Reserve account in accordance with the form HUD-9250 Condition The project only made ten of the 12 required deposits for 2025. Questioned Costs $22,844 Context Management did not make the $11,422 payment for July and October. Cause Managements controls did not identify and correct the lack of payment due to turning off automatic payments, on a timely basis. Effect The Replacement Reserve was underfunded by two deposits during 2025. Repeat Finding No Recommendation The Project should establish and follow a consistent monthly review process to ensure all deposits are made on a timely basis. Views of Responsible Officials and Planned Corrective Actions There is no disagreement with the audit finding. Management Response Management continues to review and establish processes related to review and approval to ensure monthly replacement reserve deposits are made. The missed July payment was made April of 2026. The missed October deposit has not yet been paid as the property does not have the cash on hand to make the payment. Management will be working with HUD to resolved.