Finding 2024-001 Criteria The Project must make the required monthly reserve for replacements deposits according to the Regulatory Agreement with HUD. Statement of Condition The reserve for replacements account was under funded by $14,759 as of December 31, 2024, due to deposits not being made in a timely manner. Effect or Potential Effect The Project is in non-compliance with the reserve for replacements compliance requirement of the Section 202 Capital Advance Program. Cause Internal controls are not in place to ensure that reserve for replacements deposits are funded in the appropriate amount and in a timely manner. Recommendation We recommend that the Project establish internal controls to ensure reserve for replacements deposits are made in the appropriate amounts and in a timely manner. Views of Responsible Officials and Planned Corrective Action The Auditee has recognized the deficiency and made an additional deposit to the reserve for replacements. Proper controls were put in place to ensure that reserve for replacements deposits are funded in the appropriate amount and in a timely manner. If the U.S. Department of Housing and Urban Development has any questions regarding this plan, please call Darryl Yorkman, Controller at 856-486-1990.