Finding 456 (2023-001)

-
Requirement
N
Questioned Costs
$1
Year
2023
Accepted
2023-10-23
Audit: 1002
Organization: Nlh 5 (NM)
Auditor: Palmer & CO P A

AI Summary

  • Core Issue: The Reserve for Replacement account was underfunded by $418 as of June 30, 2023, due to a missed deposit.
  • Impacted Requirements: The project did not comply with the Capital Advance and HUD regulations requiring a total deposit of $5,022.
  • Recommended Follow-Up: Management should establish internal controls to ensure timely deposits into the Reserve for Replacement account before year-end deadlines.

Finding Text

Finding 2023-001 – Special Tests and Provisions – Reserve for Replacement Federal program information: Title: Section 811 Capital Advance CFDA Number: 14.181 Resolution Status: Resolved Information on Universe Population Size: Population size is the total amount in the Reserve for Replacement account at year-end, June 30, 2023. Sample Size Information: Reserve for Replacement ending balance at June 30, 2023. Identification of Repeat Finding and Finding Reference Number: This is a new finding for the property. Criteria: Total cash of $5,022 was required to be deposited into the Reserve for Replacement account by June 30, 2023. Statement of Condition: As of June 30, 2023, the Reserve for Replacement only had $4,604 deposited during the year. Cause: Management did not perform the Reserve for Replacement deposit for one month. Effect or Potential Effect: The project was not in compliance with the Capital Advance and current HUD regulations, the project’s Reserve for Replacement was under-funded for the current year by $418. Auditor Non-Compliance Code: N Questioned Cost: $418 Reporting Views of Responsible Officials: Management agrees with the Reserve for Replacement calculations and is aware of the current deposit required to the Reserve for Replacement. Recommendation: Management should implement internal controls to make any required deposits before the year-end deadline. Auditor’s Summary of Auditee’s Comments on the Findings and Recommendations: Completion Date: Management transferred an additional $418 on July 12, 2023. Response: Funds will be transferred from the operating account to the reserve for replacement account as soon as they are available.

Corrective Action Plan

FINDING 2023-001 - Special Tests and Provisions - Reserve for Replacement Criteria: Total cash of $5,022 was required to be deposited into the Reserve for Replacement account by June 30,2023 Statement of Condition: As of June 30, 2023, the Reserve for Replacement only had $4,604 deposited during the year. Cause: Management did not perform the Reserve for Replacement deposit for one month. Effect or Potential Effect: The project was not in compliance with the Capital Advance and current HUD regulations, the project’s Reserve for Replacement was under-funded for the current year by $418. Auditor Non-Compliance Code: B Questioned Costs: $418 Reporting Views of Responsible Officials: Management agrees with the Reserve for Replacement calculations and is aware of the current deposit required to the Reserve for Replacement. Auditor's Recommendations: Management should implement internal controls to make any required deposits before the year-end deadline. Action Plan: Money was transferred to the Replacement Reserve account in July 2023.

Categories

Questioned Costs HUD Housing Programs Reporting Special Tests & Provisions Internal Control / Segregation of Duties

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
14.181 Supportive Housing for Persons with Disabilities $1.43M
14.195 Section 8 Housing Assistance Payments Program $63,477