Finding 12270 (2022-002)

Material Weakness
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-09-24
Audit: 16562
Organization: Canaan Manor Detroit (LA)
Auditor: Wharton CPA LLC

AI Summary

  • Core Issue: The property is not depositing the required amount into the reserve for replacement account, falling short of HUD's mandated increase.
  • Impacted Requirements: Monthly deposits should have increased from $2,463 to $2,520 starting 10/1/22, but the property continued to deposit only $2,463.
  • Recommended Follow-Up: Management should raise the monthly deposits to the required amount and address the underfunded balance in the reserve account.

Finding Text

2022-2 Reserve for Replacement Increase not Deposited Condition: The property continued to deposit only $2,463 per month in the reserve for replacement account when a HUD mandated increase had been made to $2,520 each month starting 10/1/22. Criteria: HUD required the property to increase its deposits to Reserve for replacement on 10/1/22 from $2,463 to $2,520. Cause: It is uncertain as to why the increased deposits were not made. Effect: The reserve for replacement account is underfunded and not in compliance with the HUD mandated amount. Recommendation: I recommend the management increase its monthly reserve for replacement deposits to the appropriate amount and increase the account by the underfunded balance.

Corrective Action Plan

2022-2 ? Reserve for Replacement Increase Not Deposited Condition: The property continued to deposit $2,463 per month in the Reserve for Replacement account when a HUD mandated increase had been made to $2,520 each month starting 10/1/22. Response: Management acknowledges that this was an oversight and will deposit the additional $57 for October, November and December 2022 for a total of $171 for the additional amount due as of December 2022 and will continue to make the $2,520 monthly deposits thereafter.

Categories

HUD Housing Programs

Other Findings in this Audit

  • 12269 2022-001
    Material Weakness
  • 588711 2022-001
    Material Weakness
  • 588712 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $1.83M
14.195 Section 8 Housing Assistance Payments Program $206,121