Finding Text
Finding No. 2022-002 ? Replacement Reserve Federal Assistance Listing Number Name of Federal Program or Cluster 14.157 Supportive Housing for the Elderly Information on the Universe Population Size Replacement Reserve activity for the year ended August 31, 2022. Sample Size Information N/A Identification of Repeat Finding Reference Number 2021-003 Criteria In accordance with the Entity?s regulatory agreement with HUD, only upon approval from HUD can the Entity withdraw funds from the replacement reserve account. Statement of Condition The Entity withdrew $15,000 from the replacement reserve account without the approval of HUD. Cause Funds for unpaid vouchers for PRAC were withdrawn from replacement reserve and did not have the proper HUD approval for the withdrawals. Effect or Potential Effect The Entity is in violation of the requirements of its regulatory agreement. Auditor Non-Compliance Code A ? Unauthorized Withdrawals from the Replacement Reserve Account. Questioned Costs There were no known questioned costs. Perspective The finding is currently awaiting proper approval from the U.S. Department of Housing and Urban Development (?HUD?). Repeat Finding Yes Recommendations We recommend that management evaluate its process and implement policies to mitigate the chances of withdrawing funds from the replacement reserve without HUD approval. Views of Responsible Officials - from Corrective Action Plan Actions Taken or Planned Auditee agrees with this finding and has taken steps to prevent this from occurring in the future. A new Executive Director has taken over the responsibility for withdrawing funds as well as oversight from the Board of Directors. Auditee has been in discussion with HUD and will submit a letter with justification of withdrawals upon receipt of the notice of violation as requested by HUD. If accepted by HUD, this will clear this finding for the amount transferred during the fiscal year. Status of Corrective Action on Prior Findings Finding 2021-003 is cleared. A new Executive Director has taken over responsibility for withdrawing funds as well as oversight from the Board of Directors. A letter was submitted to HUD notifying them of the withdrawals by the previous director with a plan to correct. In addition to the letter, invoices were submitted to justify the transfers. HUD approval for the justification for the withdrawals was received on 2/21/2023 and 4/04/23. No amounts remain due to the account.