Finding 395036 (2023-001)

Significant Deficiency

Requirement

Questioned Costs

Year

2023

Accepted

2024-04-29

Audit: 304971

Organization: Salvation Manor, Inc. (LA)

Auditor: Wharton CPA LLC

AI Summary

Issue: A $4,000 transfer from the Replacement Reserve account occurred without prior HUD approval.
Requirement: HUD 4350.1-Rev-1 mandates that owners must obtain approval before using replacement reserve funds.
Follow-up: Management should ensure compliance with HUD regulations to avoid future violations.

Finding Text

2023-1 Transfer from Replacement Reserve Account Without Prior HUD Approval Condition: There was a $4,000 transfer made from the Replacement Reserve account to the Operating Account in December 2023. Criteria: According to HUD 4350.1-Rev-1 requires owners/mortgagors to request prior approval from HUD for use of replacement reserve funds. Cause: A $4,000 transfer was made in December 2023 from the Replacement Reserve account without an approved 9250 on file. HUD approval was received in January 2024. Effect: The Project is not in compliance with HUD regulations as it relates to obtaining proper approval prior to use of replacement reserve funds. Recommendation: I recommend management follow regulations in HUD 4350.1-Rev-1.

Corrective Action Plan

Due to insufficient operating funds to repair costs, an EMERGENCY Replacement Reserve authorization request of $4,000 was attempted on December 29, 2023 via email. Due to holiday closures, that attempt failed. A subsequent post holiday response was received on January 2, 2024 recommending submission of HUD-9250. Upon submission of the HUD-9250, approval was obtained on January 8, 2024. The Project will comply with HUD regulations in reference to obtaining proper approval prior to use of replacement of reserve funds.

Other Findings in this Audit

971478 2023-001

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
14.157	Supportive Housing for the Elderly	$917,600
14.195	Section 8 Housing Assistance Payments Program	$28,244