Finding 389918 (2023-004)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2024-03-29

AI Summary

  • Core Issue: The replacement reserve account is not interest-bearing, violating HUD compliance requirements.
  • Impacted Requirements: Funds must be in an interest-bearing account, with all earnings added to the reserve.
  • Recommended Follow-Up: Transfer funds to an interest-bearing account to ensure compliance and avoid penalties.

Finding Text

Compliance Requirement: Special Tests and Provisions Criteria: In accordance with the Project’s regulatory agreement with HUD, management shall establish and maintain a replacement reserve account to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally secured depository in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD will be deposited monthly in the reserve fund. All disbursements from the reserve must be approved by HUD. Condition: Based on the evaluation of the cash account that holds the replacement reserve funds, the account is not interest-bearing. Cause: Management was unaware of replacement reserve compliance requirements. Effect: The organization is not in compliance with this requirement. Recommendation: To avoid potential non-compliance, we recommend that management transfer the funds into an interest-bearing account. Management’s Response: Refer to Corrective Action Plan.

Corrective Action Plan

In accordance with the Project's regulatory agreement with HUD, management shall establish and maintain a replacement reserve account to aid in funding extraordinary maintenance and repair and replacement of capital items The replacement reserve funds must be deposited in a federally secured depository in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD will be deposited monthly in the reserve fund. All disbursements from the reserve must be approved by HUD. Management's View: Proposed Corrective Action: Management will ensure to speak to CEO and change reserve account into an account that when transferred is made, it will be into an account that is actually an interest-bearing account. Anticipated Correction Date: Correction to be done 1st week of April 2004.

Categories

Special Tests & Provisions HUD Housing Programs

Other Findings in this Audit

  • 389916 2023-002
    Material Weakness Repeat
  • 389917 2023-003
    Material Weakness Repeat
  • 389919 2023-005
    Material Weakness
  • 966358 2023-002
    Material Weakness Repeat
  • 966359 2023-003
    Material Weakness Repeat
  • 966360 2023-004
    Material Weakness Repeat
  • 966361 2023-005
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.181 Supportive Housing for Persons with Disabilities $82,415