Finding 504749 (2024-001)

-
Requirement
N
Questioned Costs
-
Year
2024
Accepted
2024-11-05

AI Summary

  • Core Issue: The Project failed to make 9 required monthly deposits to the replacement reserve, totaling $41,243.
  • Impacted Requirements: This violates 24 CFR 891.605, which mandates monthly deposits to the replacement reserve account as determined by HUD.
  • Recommended Follow-Up: Implement budgeted cash flow projections to better manage liquidity and ensure timely deposits in the future.

Finding Text

2024-001 Funding of Replacement Reserve Criteria: According to 24 CFR 891.605, the Project shall make monthly deposits to the replacement reserve account in an amount determined by HUD. Condition: Through our testing of the 12 monthly replacement reserve deposits, we noted the Project did not make 9 monthly deposits totaling $41,243 within the year under audit. Cause: The Project experienced cash flow shortages that caused delay of the Project's replacement reserve deposits. Effect: The Project replacement reserve account was underfunded during the year. Questioned Cost: None noted Recommendation: Establish effective budgeted cash flow projections for the fiscal year in order to plan for and timely resolve any liquidity issues. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost.

Corrective Action Plan

The project deposited the reserve funds due in July of 2024. The project plans to expand on its cash flow forecasting and monitor actual cash flow against projections.Replacement reserve deposit will be made ii a timely fashion going forward. Anticipated comletion date : July 31,2024. Responsible contact person Li Huang- Assistant Controller- First Realty Management

Categories

HUD Housing Programs

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $180,352