Finding 525579 (2024-001)

FINDING No. 2024-001: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, ALN 14.155 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: Yes, 2023-002. Criteria: As required by HUD regulation, timely monthly deposits must be made to the Replacement Reserve account. Statement of Condition: The Project underfunded the account by $436 in the current year and did not correct the prior year deficiency of $175. Cause: The Project did not fund the reserve account with the new amount at the beginning of the year. Effect or Potential Effect: Deficiently funded reserve for replacements. 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: Management should implement procedures to ensure the replacement reserve is properly funded on a monthly basis. Response Indicator: Agree. Completion Date: 06/30/2025 Response: We are researching the underfunding and will ensure the RR account is fully funded on a monthly basis. New procedures have been implemented to review the deposits each month to ensure amounts are proper.