Finding 1229333 (2026-001)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2026
Accepted
2026-09-10

AI Summary

  • Core Issue: Management did not properly document or compare current and prior-year replacement reserve requests, leading to potential inaccuracies.
  • Impacted Requirements: The lack of a centralized register and independent review means the auditee may not ensure the accuracy and completeness of requests.
  • Recommended Follow-Up: Implement a documented review process and establish a centralized register with unique identifiers for better tracking and accountability.

Finding Text

Management requested and received a release from its replacement reserve which included six items requested and received in the prior year. HUD approved the release in this instance; however, that approval was based on the supporting information submitted by the project and does not relieve the auditee of responsibility for the accuracy and completeness of its request. Management's review process did not include a documented comparison of the current replacement reserve request to prior-year requests, approvals, and disbursements. The entity also lacked a centralized register using unique invoice or transaction identifiers and an independent review designed to identify items previously reimbursed.

Corrective Action Plan

SPM has an established process for preparing and reviewing replacement reserve reimbursement requests prior to submission to HUD. In this instance, the duplicate invoices were not identified during that review process and were subsequently included in the October 2025 request. HUD approved the reserve release based on the supporting documentation submitted; however, management recognizes its responsibility to ensure the accuracy and completeness of all reimbursement requests. To correct the issue, the property will reimburse the Replacement Reserve account for the duplicate amount of $31,482.32 and maintain documentation supporting the repayment. Management will also review prior replacement reserve reimbursement requests to confirm that no additional duplicate reimbursements exist. To prevent a recurrence, staff responsible for preparing and reviewing replacement reserve requests will be retrained on the review requirements, including verification against previously submitted reserve releases and supporting documentation. Management will also reinforce documentation and review procedures to ensure duplicate expenses are identified and resolved before future submissions are made.

Categories

HUD Housing Programs

Programs in Audit

ALN Program Name Expenditures
14.157 SUPPORTIVE HOUSING FOR THE ELDERLY $5.81M