Finding 1237990 (2025-001)

SECTION III - FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAMS AUDIT FINDING No. 2025-001: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Unresolved. Information on Universe Population Size: Replacement reserve account. Sample Size Information: All replacement reserve deposits for the year ended December 31, 2025. Identification of Repeat Finding and Finding Reference Number: Yes, 2024-001. Criteria: In accordance with HUD, required monthly deposits must be made to the Project’s replacement reserve account. Statement of Condition: The Project underfunded the replacement reserve account by $24,000 in the current year and did not correct the prior years’ net deficiency of $24,000 for a total underfunding of $48,000. Cause: The Project did not fund the reserve account as required by the funding requirements stipulated in form HUD-9250. Effect or Potential Effect: Deficiently funded reserve for replacements account. Auditor Non-Compliance Code: N – Reserve for Replacements deposits Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: Management should implement procedures to ensure the replacement reserve is properly funded on a monthly basis and fund the account for the total deficient amount or obtain a HUD approved retroactive suspension for the period. Response Indicator: Agree. Completion Date: 12/31/2026 Response: The verification of the correct funding amounts is now confirmed against approved 9250 on a monthly basis, and is a step that is being added on the month-end close checklist. RR will be funded correctly by 12.31.26. This property requested a suspension due to the overfunding of the RR account. Questioned Costs – Department of Housing and Urban Development: $24,000