Finding Text
Condition: During 2022, there was a shortfall of $10,935 in required deposits into the reserve for replacements. Identification as a Repeat Finding: Finding 2021-002 was reported in the immediate prior year. Criteria: As required by the Section 811 Capital Advance Program ("Program") Regulatory Agreement ("Agreement") with the United States Department of Housing and Urban Development ("HUD"), the Organization is required to establish and maintain a reserve for replacements in a separate bank account in the name of the Organization. The Organization is required to make payments of $536 per month through March 31, 2022, at which time payments increased to $1,036 through February 28, 2024, until a different date or amount is approved in writing by HUD. During 2022, the Organization did not make any monthly deposits into the reserve resulting in a cumulative shortfall of $12,007. Cause: Failure to make all required payments into the replacement reserve during the period under audit as result of the Organization not having the cash to make the deposits. Effect or Potential Effect: Noncompliance with the terms and requirements of the Agreement as well as the compliance requirements of the Program in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Recommendations: We recommend that the Organization make up the shortfall of deposits in the subsequent period and on a going forward basis, make the monthly required reserve for replacement deposits. Views of Responsible Officials: Management will make the necessary required deposits to bring the balance of the reserve for replacement in alignment with requirements of the Agreement and going forward will make the required monthly deposits. As of the report date, the Organization has not fulfilled its obligation relating to the required deposits per the terms of the Agreement.