Finding 522707 (2024-002)

FINDING No. 2024-002: Section 8 Project Based Rental Assistance ALN 14.195 Finding Resolution Status: Unresolved. Information on Universe Population Size: All replacement reserve deposits for the year ended June 30, 2024. Sample Size Information: All replacement reserve deposits for the year ended June 30, 2024. Identification of Repeat Finding and Finding Reference Number: No. Criteria: HUD regulations require OCAF rent adjusted projects to increase its monthly replacement reserve funding by a similar factor as the authorized rent increase. In addition, HUD requires the correct authorized monthly deposit be made to the replacement reserve account. Statement of Condition: The Project did not increase the required monthly deposit to the replacement reserve account for one month corresponding with the OCAF rent increase. In addition, the Project overfunded one of its required monthly deposits by $1,025 which was later withdrawn to correct the account. In total, the replacement reserve was underfunded by $271. Cause: An increase in funding was not implemented and the incorrect required monthly amount was deposited and later corrected without HUD authorization. See Finding 2024-004. Effect or Potential Effect: Deficiently funded reserve for replacement account. Auditor Non-Compliance Code: N – Reserve for Replacements Deposits. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: The Project should implement procedures to ensure that replacement reserve monthly deposits are increased at a factor in line with the authorized OCAF rental increase or HUD stipulated factor and that the correct required monthly amount is deposited into the replacement reserve account. Response Indicator: Agree. Completion Date: 06/30/2025 Response: Staff training has been provided and included in monthly reporting procedures.