Finding 522475 (2024-001)

S3800-011 Title and CFDA Number of Federal Program - 14-181 Supportive Housing for Persons With Disabilities S3800-015 Type of Finding - Federal Award Finding S3800-016 Finding Resolution Status - In Process S3800-017 Information on Universe Population Size – Not Applicable S3800-018 Sample Size Information – Not Applicable S3800-019 Identification of Repeat Finding and Finding Reference Number – Not Applicable S3800-020 Criteria: HUD Regulatory Agreement provision requiring establishment and maintenance of a replacement reserve account, which required monthly deposits of $700. That deposit requirement was increased to $741 effective July 1, 2024. S3800-030 Statement of Condition: Management did not make all of the required deposits to the replacement reserve at June 30, 2024. The annual deposits required were $8,892 but only $5,918 was deposited. S3800-030 Cause: Management made bookkeeping entries to make it appear that the transfers had all been made monthly as required, but the actual cash did not get deposited and were listed as in-transit. In addition, some of the deposits were not made during the transition in management. S3800-033 Effect or Potential Effect: Management did not always follow the regulatory agreement with respect to making monthly deposits to the replacement reserve account. S3800-035 Auditor Non-Compliance Code - (N) Replacement Reserve Deposits S3800-040 Questioned Costs - $2,974 S3800-045 Reporting Views of Responsible Officials: Management will design controls to ensure all monthly deposits are made timely. Property(s) and associated questioned costs this finding applies to: S3800-037 FHA/Contract Number - 127-HD025 S3800-038 Questioned Costs - $2,974 S3800-050 Context: The HUD regulatory agreement requires twelve monthly deposits of $741 monthly to be made to a segregated replacement reserve account controlled by the Organization. Management recorded all twelve transfers, but some of the transfers were listed as in-transit on the bank statements and had not actually been made. S3800-080 Recommendation: Management should review policies and procedures to ensure all required deposits to the reserve account are made timely. Management might consider setting up automatic transfers to make the required monthly deposits. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: Management concurs with the auditor’s recommendation, and will design controls to ensure all required monthly deposits are made timely. S3800-130 Response Indicator – Agree S3800-140 Completion Date – December 20, 2024 S3800-150 Response: Management concurs with the auditor’s recommendation, and will design controls to ensure all required deposits are made to the replacement reserve.