Finding Text
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FINDING NO. 2022-001: Section 811, CFDA 14.181 Condition: Replacement reserve deposits were not made on a monthly basis and only nine deposits were made in 2022. Criteria: The regulatory agreement requires monthly deposits to the replacement reserve account. Effect: The replacement reserve account was underfunded at year-end. Context: All 2022 bank statements for the replacement reserve account were reviewed and the deposit dates noted. There were no deposits made for April, July or August 2022. There were no questioned costs. Cause: Due to cash flow, management was not able to make the deposits to the replacement reserve account on a monthly basis. Recommendation: Management should prioritize replacement reserve deposits to ensure they are made on a monthly basis. Additionally, management should make the deposits for the three months as soon as possible. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding, and adopts the auditors' recommendation. The Project continues to experience poor cash flow from time to time. Reserve for replacement deposits are and will continue to be prioritized. Payment of management fees to the managing agent will be deferred as needed until cash flow improves. Efforts to seek additional funding for the Project to improve overall funds available and cash flow will continue.