Finding 393051 (2023-001)

Significant Deficiency
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2024-04-11

AI Summary

  • Core Issue: The Project failed to make a required monthly deposit into the replacement reserve, resulting in an underfunding of $3,658 for 2023.
  • Impacted Requirements: Compliance with HUD regulations mandates timely approval and deposits into the replacement reserve account.
  • Recommended Follow-Up: Management should implement a review process to ensure all future deposits are made monthly and in line with HUD regulations.

Finding Text

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Capital Advances, Section 202 - Project Rental Assistance and Section 202 Demonstration Pre-Development Planning Grant. Assistance Listing Number: 14.157 Federal Award Identification Number and Year: N/A, 2023 Award Period: 01/01/2023-12/31/2023 Type of Finding:  Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Management of the Project is responsible for complying with laws and regulations. This responsibility includes compliance with HUD regulations requiring the Project to obtain approval for replacement reserve withdrawals and to make all required deposits timely. Condition: The Project is required by its regulatory agreement with HUD to make monthly deposits into the reserve for replacement account. The reserve was underfunded by one monthly deposit for the year ended December 31, 2023. Cause: The Project did not review the replacement reserve transactions timely to ensure the transactions were in accordance with HUD regulations. Effect: The Project underfunded the required replacement reserve deposits for the year ended December 31, 2023, by $3,658, which was not in accordance with the regulatory agreement approved by HUD. Repeat Finding: N/A Recommendation: We recommend that management take the necessary steps to ensure that future deposits are made in accordance with HUD regulations. Payments should be made monthly into the replacement reserve. Views of responsible officials: There is no disagreement with the audit finding. Management is aware of the underfunding and will make the required deposit after year-end.

Corrective Action Plan

UNDEFUNDING OF THE RESERVE RECOMMENDATION: WE RECOMMEND THAT MANAGEMENT TAKE THE NECESSARY STEPS TO ENSURE THAT FUTURE DEPOSITS ARE MADE IN ACCORDANCE WITH HUD REGULATION. PAYMENTS SHOULD BE MADE MONTHLY INTO THE REPLACEMENNT RESERVE. THERE IS NO DISAGREEMENT WITH THE AUDIT FINDING. ACTION PLANNED IN RESPONSE TO FINDING: THE PROJECT'S OPERATING SYSTEM AND ANNUAL PROCEDURES ARE BEING ADDRESSED TO COMPLY WITH HUD. NAME OF THE CONTACT PERSON RESPONSIBLE FOR CORRECTIVE ACTION: JOHN WESTERVELT, PRESIDENT PLANNED COMPLETION DATE FOR CORRECTIVE ACTION PLAN: JANUARY 31, 2024

Categories

HUD Housing Programs Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 393052 2023-001
    Significant Deficiency
  • 393053 2023-001
    Significant Deficiency
  • 969493 2023-001
    Significant Deficiency
  • 969494 2023-001
    Significant Deficiency
  • 969495 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $400,000
14.239 Home Investment Partnerships Program $300,000
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $170,000