Finding Text
Criteria - HUD requires that the reserve for replacements account be funded by $290.58 monthly in accordance with the regulatory agreement.
Condition - The reserve for replacements account was underfunded by $1,162 during the year ended December 31, 2023. Additionally, the Company failed to deposit $872 underfunded from the year ended December 31, 2022.
Cause - The Company failed to make 4 months of deposits required for 2023 as well as the 3 underfunded months from 2022.
Effect - The Company was not in compliance with the above HUD regulations and the reserve for replacements account was underfunded by $2,034.
Questioned Costs - None identified.
Statistical Sampling - The sample was not intended to be, and was not, a statistically valid sample.
Repeat Finding - This is a repeat of finding 2022-001 as reported for the year ended December 31, 2022.
Recommendation - We recommend that the delinquent deposits totaling $2,034 be deposited into the reserve for replacements account as soon as possible.
Management’s Response - Management understands HUD’s required deposit requirement and will deposit 12 months going forward, as well as the delinquent deposits totaling $2,034 by December 31, 2024.