Finding Text
2022-001 Federal agency: Department of Housing and Urban Development Federal program: Section 811 - Supportive Housing for Persons with Disabilities CFDA Number: 14.181 Type of Finding: ? Material Weakness in Internal Control over Compliance ? Compliance ? Material Criteria or Specific Requirement: Loan from Replacement Reserve account should be repaid when rent subsidy payments are received and required deposits to the Replacement Reserve should be made on a monthly basis. Condition: Per a HUD Approval No. 2502-0555 dated April 14, 2022, Permission was granted to borrow funds to cover operating expenses from the Replacement Reserve account due to not receiving January, February and March PRAC funds. The total amount of the borrowed funds was to be deposited back to the Replacement Reserve upon receipt of the PRAC subsidy. In addition, monthly deposits of $5,000 per month should be made into the Replacement Reserve account. The deposits were only made for 7 months. Questioned Costs. $85,000 Context: Procedures were performed to test the activity in the Replacement Reserve account for 2022, which determined that the proper deposits were not made through 2022. Cause: Controls were not followed to ensure that the proper amounts were being deposited into the Replacement Reserve account. Effect: The Replacement Reserve account is under funded by $85,000. Repeat Finding: No. Recommendation: The Project should deposit the $85,000 into the Replacement Reserve account as soon as possible. Views of Responsible Officials and Corrective Action: Management intends to correct this underpayment within the next 30 days. A monthly process has been established to insure that the monthly required deposits to the Replacement Reserve are made on a current basis.