Finding 497536 (2023-002)

Significant Deficiency Repeat Finding
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2024-09-20
Audit: 320274
Organization: Canaan Manor Dayton (LA)
Auditor: Wharton CPA LLC

AI Summary

  • Core Issue: The Project failed to make required monthly deposits into the reserve fund, with only 11 deposits made in 2023.
  • Impacted Requirements: This non-compliance violates the Regulatory Agreement, which mandates timely monthly deposits for the reserve fund.
  • Recommended Follow-Up: Ensure the Property adheres to the monthly deposit schedule as outlined in the Regulatory Agreement.

Finding Text

2023-2 Reserve for Replacement Deposits Not Made or Not Made Timely 2023-2 Reserve for Replacement Deposits Not Made Timely or Not At All Condition: The Project did not make the required deposits into the bank account on a monthly basis. There were 11 deposits made during the 2023 year. Criteria: According to the Regulatory Agreement, “mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank…Concurrently with the effective commencement of rental assistance payments under the Project Rental Assistance Contract, the Mortgagor will deposit an amount…per month unless a different date or amount is approved in writing by HUD”. Cause: The cause is undeterminable. Effect: The Project is not in compliance with the Regulatory Agreement. The cash balance was overstated by $1,076 related to deposits that were never made to this account. The balance was corrected during the audit. Recommendation: I recommend the Property make required monthly deposits according to the Regulatory Agreement.

Corrective Action Plan

The required annual deposit was made into the property’s reserve for replacement account. However, in October 2023, management was notified by the banking institution of fraudulent activities that had taken place with some of the Reserve for Replacement accounts held at their institution. The banking institution closed all accounts and restricted all routine depository activity. The banking institution established new accounts in January 2024 at which time management could resume making deposits. Management’s records reflect that 12 checks were drafted and in 2023.

Categories

HUD Housing Programs

Other Findings in this Audit

  • 497535 2023-001
    Significant Deficiency
  • 497537 2023-003
    Significant Deficiency
  • 1073977 2023-001
    Significant Deficiency
  • 1073978 2023-002
    Significant Deficiency Repeat
  • 1073979 2023-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
14.181 Supportive Housing for Persons with Disabilities $1.65M
14.195 Section 8 Housing Assistance Payments Program $132,450