Core Issue: There is a significant deficiency in internal controls, leading to noncompliance with monthly deposit requirements for the replacement reserve account.
Impacted Requirements: Monthly deposits to the replacement reserve account are mandatory, but were not consistently made due to cash flow constraints.
Recommended Follow-Up: The organization should ensure that monthly deposits are made as required to maintain compliance.
Finding Text
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Supportive Housing for Elderly Section 202 Capital Advance Assistance Listing Number: 14.157 Federal Award Identification Number and Year: 075-EE017-WAH – 2025 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and immaterial noncompliance. Criteria or specific requirement: Monthly deposits are required to be made to the replacement reserve account. Condition: Monthly deposits are required to be made to the replacement reserve account. Questioned costs: N/A Context: Required deposits were made but they were not made monthly due to cash flow restraint. Cause: Required deposits were made but they were not made monthly due to cash flow restraint. Effect: Not in compliance with monthly requirement Recommendation: The Organization should make the required deposits monthly. Views of responsible officials: There is no disagreement with the audit finding.
Corrective Action Plan
Required Monthly Deposits Not Made Timely. Criteria: Monthly deposits are required to be made to the replacement reserve account. Condition: Monthly deposits were not made. Deposits were made every few months and total amount deposited ties to the required total deposits for the year. Context: Required deposits were made but they were not made monthly due to cash flow restraint. Response: The Organization will make the required deposits monthly if cash flow allows. Management expects these corrective actions to ensure future compliance with applicable federal and HUD reporting requirements.
Categories
Significant DeficiencyInternal Control / Segregation of Duties