Finding 42515 (2022-001)

-
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-03-22

AI Summary

  • Core Issue: The Organization did not make the required monthly deposits into the reserve for replacements account, leading to an underfunded account by $200.
  • Impacted Requirements: Monthly deposits of $52,175 and $52,225 were not updated as per the regulatory agreement following an increase approved in September 2022.
  • Recommended Follow-Up: Ensure all future deposits comply with the regulatory agreement, and continue to strengthen internal controls to prevent similar issues.

Finding Text

Finding Type - Immaterial noncompliance with major program requirements Title and Assistance Listing Number of Federal Program -14.155 - U S. Department of Housing and Urban Development - Section 223(f) HUD-Insured Mortgage Finding Resolution Status - Cleared Information on Universe and Population Size - N/A Sample Size Information - N/A Identification of Repeat Finding and Finding Reference Number - N/A Criteria - The Organization should have made 8 monthly deposits of 52,175 and 4 monthly deposits of 52,225 into the reserve for replacements account as required by the regulatory agreement. Statement of Condition - The Organization failed to make the required reserve for replacements deposits in the current fiscal year. Cause - The Organization failed to monitor the cash requirements of the reserve for replacement account as specified by the regulatory agreement. Effect or Potential Effect - The replacement reserve account was underfunded in the current fiscal year by $200 Auditor Noncompliance Code - N - Reserve for replacements deposits Context - An increase in the required deposits was approved effective September 2022; however, the monthly amount deposited was not updated to reflect this increase. Recommendation - All required deposits should be made in accordance with the regulatory agreement. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - Management should make the required reserve for replacements deposits in the current fiscal year. Response Indicator - Agree Response - Management detected the error and deposited the underfunded amount in March 2023. Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance.

Corrective Action Plan

Finding Number: 2022-001 Condition: The Organization failed to make the required reserve for replacements deposits in the current fiscal year. Planned Corrective Action: Management detected the error and deposited the underfunded amount in March 2023. Management acknowledges noncompliance in the current fiscal year and has taken measures to improve internal controls over compliance. Contact person responsible for corrective action: Lorinda Schalk, Chief Financial Officer / Treasurer Completion Date: March 1, 2023

Categories

HUD Housing Programs Internal Control / Segregation of Duties

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
14.155 Mortgage Insurance for the Purchase Or Refinancing of Existing Multifamily Housing Projects $1.56M
14.195 Section 8 Housing Assistance Payments Program $641,661