Finding Text
Criteria The Organization as mortgagor, in accordance with the regulatory agreement, is required to maintain a reserve for replacements. The required minimum monthly deposit into this account is $2,079. Additionally, the Organization is required to deposit all prior year required delinquent deposits. For the year ended September 30, 2022, a total of $29,109 was to be deposited into the replacement reserve account, which consists of $24,952 for current year deposits, plus $4,157 for prior year delinquent deposits; however, no deposits were made into the replacement reserve account. Condition The Organization did not make all required deposits into the replacement reserve account per the regulatory agreement. Cause Due to limited cash flow management was unable to fulfill all required deposits. Questioned Costs None noted. Context When performing our audit, we noted the Organization did not make all required deposits in the current year. Effect The Organization did not make the deposits into the replacement reserve account as required by the HUD agreement. Repeat Finding Repeat Finding of 2021-001 and 2020-001. Recommendation We recommend management make the required deposit as soon as possible and review the activity in the reserve accounts monthly to determine that deposits are being made as required. Views of Responsible Official and Planned Corrective Action Management concurs with the audit finding. Management will transfer the funds as soon as cash flow permits.