Finding 404764 (2023-001)

Finding #2023-001: Section 202 Supportive Housing for the Elderly, Assistance Listing 14.157 and Section 8 Housing Assistance Payments Program, Assistance Listing 14.195 Type of Finding: Material Weakness Condition: The Company did not make the correct monthly deposit amount to the replacement reserve for 10 months and the Company did not obtain HUD’s approval for a withdrawal from the replacement reserve account. Criteria: The HUD regulatory agreement requires monthly deposits into the replacement reserve account and requires HUD’s approval for any withdrawals from the replacement reserve. Questioned cost: $2,941 Effect: Replacement reserve account is underfunded and the Company is in violation of its Regulatory Agreement. Cause: Oversight Repeat Finding: Yes Recommendation: 2023-001a: The Company should closely monitor the replacement reserve account to ensure compliance with the Regulatory Agreement. 2023-001b: We recommend the Company deposit $2,941 into the replacement reserve account. Management’s View: Management is in agreement with the finding. The corrective action plan is included in the audit report. Auditor’s Comment: On December 19, 2023, the Company deposited $2,941 into the replacement reserve account. Finding #2023-001 cleared.