Finding 397055 (2023-001)

FINDING No. 2023-001: Section 202 Supportive Housing for the Elderly, ALN 14.157 Finding Resolution Status: Unresolved. Information on Universe Population Size: All replacement reserve deposits and withdrawals Sample Size Information: All replacement reserve deposits and withdrawals Identification of Repeat Finding and Finding Reference Number: No Criteria: The regulatory agreement states that the mortgagor, HUD, must approve all releases from the replacement reserve and such funds must be used for the authorized purpose. Also, in accordance with HUD, required monthly deposits must be made to the Project’s replacement reserve account Statement of Condition: HUD approved a replacement reserve withdrawal for the Project’s submission of a duplicate invoice that was previously approved and released for $1,954. In addition, the Project overfunded the account by$1,575. Cause: The Project requested a release of funds for one invoice that was already released on a previously approved HUD Form-9250 request and erroneously made an additional deposit to the replacement reserve account. Effect or Potential Effect: Deficiently funded reserve for replacements and overfunded reserve for replacement account. Auditor Non-Compliance Code: N – Reserve for Replacement deposits Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: A deposit should be made to correct the net underfunding of the replacement reserve account. The Project should implement procedures to ensure that the correct amount is deposited into the replacement reserve account each month. The Project should implement procedures to ensure that HUD Form-9250 requests do not include invoices that were requested on previously approved HUD Form-9250 submissions. Response Indicator: Agree. Completion Date: 12/31/2024 Response: We are researching the underfunding and will ensure the RR account is fully funded on a monthly basis. New procedures have been implemented to review the deposits each month to ensure amounts are proper. Additionally, 9250 process is under review to ensure invoices are submitted once on the appropriate 9250.