Finding Text
Finding 2023-001 - Replacement Reserve Deposits
Federal Program – Section 8 Housing Assistance Payments Program
Assistance Listing Number – 14.195
Significant Deficiency
Category of Finding – N – Special tests and provisions
Criteria - Pursuant to LEUTHC’s Regulatory Agreement with the Department of Housing and Urban Development (HUD), 12 monthly deposits of $17,617 are required into the replacement reserve (annually $211,404).
Condition - LEUTHC made 10 monthly deposits ($176,170) to the replacement reserve in 2022. In 2023, only 1 catch-up deposit of $17,617 was made to the replacement reserve.
Effect - The replacement reserve is underfunded by $17,617.
Cause - LEUTHC did not make 2 catch-up deposits ($17,617 each) to the replacement reserve in 2023 to resolve the 2022 finding and underfunding of the replacement reserve.
Recommendation - LEUTHC should make an additional deposit to the replacement reserve of $17,617 in 2024.
Auditee’s comments and response - Management made an additional deposit to the replacement reserve of $17,617 in June 2024.
Status - Resolved