Finding Text
Statement of Condition: As a result of our audit procedures, we noted that High Street Homes, Inc. did not
make the monthly required deposits for eleven months and an unapproved withdrawal was made out of the
account.
Criteria: Management is responsible for reconciling the replacement reserve account on a monthly basis to
ensure the activity is accurately recorded on a monthly basis. In addition, request for withdrawals must be
submitted to HUD and approved by HUD prior to any withdrawals.
Cause: There was significant turnover of key personnel in the Finance department during the year, causing
new personnel who were inexperienced with the HUD replacement reserve process to have to assume these
duties.
Effect: The HUD required monthly deposits were not made and an unapproved withdrawal was made.
Recommendation: Replacement reserve account should be reconciled monthly and reviewed to ensure all
required deposit activity is made and there are no unapproved withdrawals from the account.
Views of Responsible Officials and Planned Corrective Actions: Upper Bay Counseling and Support
Services, Inc. will implement monthly reporting of Replacement Reserve Account and other HUD information
as part of an effort to improve internal financial reporting overall.