Finding 33768 (2022-001)

Material Weakness
Requirement
N
Questioned Costs
$1
Year
2022
Accepted
2023-01-10
Audit: 32803
Organization: Lemko Housing Corporation (MD)

AI Summary

  • Issue: The Corporation has missed 16 required deposits totaling $32,000 to the Reserve for Replacements.
  • Requirement: The Section 8 Contract mandates monthly deposits of $2,000, which management mistakenly viewed as optional.
  • Follow-up: The Corporation needs to make the overdue deposits immediately and implement procedures for timely future deposits.

Finding Text

Condition: The Corporation is delinquent in making deposits to the Reserve for Replacements as required by the Section 8 Contract. There are sixteen delinquent deposits totaling $32,000 as of September 30, 2022. Criteria: The Section 8 Contract requires monthly deposits of $2,000 to be made to the Reserve for Replacements. Cause: Management believed the monthly deposits were optional rather than mandatory. Effect: The Corporation is in violation of the Section 8 Contract. Recommendations: The Corporation should make the delinquent deposits as soon as possible and establish procedures to ensure the deposits are made on a monthly basis moving forward.

Corrective Action Plan

Statement Of Condition: The Corporation is delinquent in making deposits to the Reserve for Replacements as required by the Section 8 Contract. There are sixteen delinquent deposits totaling $32,000 as of September 30, 2022. Comments on the Findings and Recommendation: Management intends to make all delinquent deposits by October 31, 2023. Status: The Corporation has requested that HUD suspend the required monthly deposits to the Reserve for Replacements. If approved, the Corporation will make two deposits of $2,000 per month until October 2023, when all delinquent deposits will have been paid. If the suspension is not approved, the Corporation will make three deposits of $2,000 per month until October 2023, when all delinquent deposits will have been paid and will then return to making the minimum required monthly deposit.

Categories

Questioned Costs HUD Housing Programs

Other Findings in this Audit

  • 610210 2022-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.182 Section 8 New Construction and Substantial Rehabilitation $1.17M