Finding 46551 (2022-001)

Material Weakness
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-02-27

AI Summary

  • Core Issue: The Project failed to make required monthly deposits to the replacement reserve, resulting in a shortfall of $21,901.
  • Impacted Requirements: Regulatory agreement mandates monthly deposits to the replacement reserve, which were not met due to insufficient cash flow.
  • Recommended Follow-Up: Management should seek HUD approval to waive the remaining deposits, as the reserve balance exceeds $1,000 per unit.

Finding Text

Department of Housing and Urban Development Finding 2022-001 Section 202 Supportive Housing for the Elderly, AL 14.157 Statement of Condition During the year ended September 30, 2020, the Project did not make the required monthly deposits to the replacement reserve through the date of the approved waiver to suspend deposits to the reserve through June 30, 2020. The Project is required to make deposits to the reserve in the amount of $21,901 for the current year shortfall, unless waived by HUD. This is a repeat finding. Criteria The regulatory agreement requires that the Project make monthly deposits to its replacement reserve. Effect Failure to make monthly payments resulted in a shortfall in the reserve balance. Cause The Project does not generate sufficient cash flow to make the required monthly deposits. Recommendation Management should obtain HUD approval to waive the remaining underfunded deposits due to the balance of the reserve exceeding $1,000 per unit. Auditor Noncompliance Code: N. Reserve for replacements deposits (REAC); N. Special Tests and Provisions (UG) Finding Resolution Status: Unresolved Reporting Views of Responsible Officials Management agrees with the finding. The property was sold subsequent to fiscal 2022 reporting period with HUD approval and all reserves were transferred to buyer, therefore we consider this matter closed.

Categories

Special Tests & Provisions HUD Housing Programs Reporting

Other Findings in this Audit

  • 46549 2022-001
    Material Weakness
  • 46550 2022-002
    Material Weakness
  • 46552 2022-002
    Material Weakness
  • 622991 2022-001
    Material Weakness
  • 622992 2022-002
    Material Weakness
  • 622993 2022-001
    Material Weakness
  • 622994 2022-002
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $4.04M