Finding Text
Federal agency: U.S. Department of Housing and Urban Development
Federal program title: Mortgage Insurance Under Section 207, Pursuant to Section 223(f)
CFDA Number: 14.157
Award Period: January 1, 2023 through December 31, 2023
Type of Finding:
• Other matters
Criteria or specific requirement: The Corporation is required to make a deposit into the replacement reserve account.
Condition: The required deposit into the replacement reserve account for July 2023 was underfunded and late.
Questioned costs: $70.25.
Context: During our review of the replacement reserve, it was noted it was underfunded.
Cause: The Corporation’s requirement to make a deposit for the periods January 2023 - June 2023 and August 2023 - December 2023 was waived. Management did not notice that the one month’s deposit was underfunded.
Effect: The Project was out of compliance with the one deposit into the replacement reserve fund, as required by the Project's regulatory agreement.
Repeat Finding: Not a repeated finding.
Recommendation: Management should immediately make the proper deposit into the replacement reserve fund and should consistently follow their internal control procedures over replacement reserve deposits to ensure deposit are made paid timely and for the correct amount.
Views of responsible officials: There is no disagreement with the audit finding. Management properly funded the replacement reserve in March 2024.