Finding 1221706 (2026-001)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2026

Accepted

2026-06-30

Audit: 405980

Organization: Belmont Elderly Housing, Inc. (NH)

Auditor: LEONE MCDONNELL & ROBERTS P A

AI Summary

Core Issue: The management agent is not using the Replacement Reserve funds as intended, leading to low operating cash balances.
Impacted Requirements: Significant replacement costs should be approved for payment from the Replacement Reserve, not the operating account.
Recommended Follow-Up: The management agent needs to monitor and utilize the Replacement Reserve for eligible expenses to improve cash flow.

Finding Text

Finding 2026-001: Significant deficiency Information on universe: It was noted during testing that the management agent could be withdrawing more funds from the reserve for replacement account to cover costs instead of using operating funds. Sample size: Monthly reserve activity is tested for compliance. Identification of repeat finding: 2025-007 Condition: The property is not utilizing the Replacement Reserve as intended and is instead paying for costs out of the operating account. Criteria: Significant replacement costs should be submitted for approval to be paid for with Replacement Reserve funds. Effect: Low operating cash balances and cash flow issues. Context: Auditor reviewed the Replacement Reserve activity and noted minimal withdrawals. Cause: Lack of monitoring at the management agent. Recommendation: The management agent should consider using the Replacement Reserve for all applicable and allowable expenditures.

Corrective Action Plan

Finding 2026-001 Plan: Please see below the new process ensuring replacement reserve requests are being made in a timely manner: 1) Quarterly Assessment: Quarterly review are now in place to assess reserve balances and ensure funds are used for necessary repairs. Monthly cash flow reports will align reserve balances with property needs. 2) Formal Utilization Procedure: A written procedure has been established for requesting and using replacement reserve funds. This includes clear guidelines, approval workflows, and thresholds for reserve levels based on property needs. 3) Monitoring & Reporting: Periodic audits will ensure funds are spent according to HUD guidelines. 4) Staff Training & Oversight: Staff will receive training on proper reserve management, and management will increase oversight to ensure funds are used appropriately. Completion Date: 11/1/2026 Contact: Jackie Oliveira-Director of Affordable Housing

Other Findings in this Audit

1221705 2026-001

Material Weakness Repeat
1221707 2026-003

Material Weakness Repeat
1221708 2026-003

Material Weakness Repeat
1221709 2026-004

Material Weakness Repeat
1221710 2026-004

Material Weakness Repeat
1221711 2026-002

Material Weakness Repeat
1221712 2026-002

Material Weakness Repeat

Programs in Audit

ALN	Program Name	Expenditures
14.157	SUPPORTIVE HOUSING FOR THE ELDERLY	$2.35M