Finding Text
Criteria: The Capital Advance Regulatory Agreement requires management to complete monthly deposits of a prescribed amount to the reserves for replacement account.
Condition: Monthly deposits to the reserves for replacement account were not completed for the following Entity during the year ended June 30, 2024: Melon I Corporation – one of twelve monthly deposits not completed.
Cause: Management did not believe there was adequate operating cash on hand to facilitate the monthly deposits.
Effect or potential effect: Not completing monthly deposits prevents the Entity from being in compliance with the requirements from HUD.
Recommendation: Management should communicate with HUD to waive monthly deposits to the reserves for replacement account when there is insufficient operating cash to facilitate the deposit. Documentation of this communication should be maintained.
Questioned costs: None identified.
Views of responsible officials: Subsequent to report issuance management has addressed all shortfalls identified.