Finding Text
tatement of Condition: As of December 31, 2023, Sarum Village is eighteen months behind in deposits to the replacement reserve.
Criteria: USDA requires that the replacement reserve account be maintained in a separate account, with monthly deposits made as required and that USDA approval is required prior to any withdrawals.
Effect: Noncompliance with USDA regulations.
Cause: The project has cash flow issues.
Context: Review of the deposits to the replacement reserve account showed that four deposits had been made, however, all were for the year ended December 31, 2022.
Recommendation: Management should ensure that required monthly deposits are made to the replacement reserve account.
Management’s Response and Corrective Action Plan: We agree with the finding. Sarum Village is experiencing cash flow problems and will try to remedy the shortfall.