Finding Text
14.181 Supportive Housing for Persons with Disabilities Criteria: In accordance with 2 CFR 200.303, nonfederal entities receiving Federal awards (i.e., auditee management) must establish and maintain internal controls designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. According to the Anja House Regulatory Agreement, item 5(a) issued by the U.S. Department of Housing and Urban Development (HUD), the mortgager will deposit an amount equal to $173 per month into a reserve fund for replacements in a separate account unless a different date or amount is approved in writing by HUD. Condition: Internal controls were not in place to ensure timely compliance with the requirement to deposit the specified amount into the reserve fund account monthly and deposits for the months of December 2021 and June 2022 were not made. Context: With some confusion due to late payments received from HUD and staffing issues throughout the year, management simply forgot to transfer the money to the reserve fund account for the months of December 2021 and June 2022. After identifying the error after year-end, management made an additional $173 deposit to the reserve fund account in August 2022 to make up for one of the missed monthly deposits. Cause: Management did not have controls in place to monitor the reserve fund account on a monthly basis to ensure deposits were made timely. Effect: The Organization did not deposit the required amount of funds into the reserve fund account. Questioned Costs: $346 Recommendation: We recommend that the Organization establish automatic monthly transfers to the reserve fund account for the amount specified in the Regulatory Agreement, items 5(a) and that management designate an individual to monitor the account on a monthly basis to ensure deposits are made timely. Response: See corrective action plan.