Finding Text
Condition - The reserve for replacements account is underfunded by $4,749 for the year ended December 31, 2023.
Criteria - HUD requires that the reserve for replacements account to be funded by $1,583 monthly and that all withdrawals require HUD approval.
Effect - The Corporation was not in compliance with the above HUD regulations.
Questioned Cost - None
Cause - The reserve for replacements account was not funded for three months during the year ended December 31, 2022 due to poor cash flow. There were 12 deposits made during the year ended December 31, 2023, however the amount of $4,749 due for the year ended December 31, 2022 was not made during 2023.
Repeat Finding - This is a repeat finding of item 2022-001 as reported in the year ended December 31, 2022.
Recommendation - We recommend that the delinquent deposits totaling $4,749 for the year ended December 31, 2023 be deposited into the reserve for replacements accounts as soon as possible. We also recommend that approval is obtained for any withdrawals from the reserve for replacement in accordance with HUD guidelines.
Management’s Reply - Management will deposit the amount of $4,749 as soon as cash flow permits.