Finding 528340 (2024-001)

Finding: 2024-001 Program: U.S. Department of Housing and Urban Development Supportive Housing for Persons with Disabilities (Section 811) and Capital Advance Criteria or specific requirement: Management is required to make monthly deposits into the replacement reserve account at amounts that are set by HUD. Condition: Management made only nine of the twelve required monthly deposits into the replacement reserve account during the year under audit. Cause: The client experienced cash shortages during the year under audit which led to difficulties in having the available cash flow to make the required deposits. Effect: The replacement reserve account had a lower balance than was required as of December 31, 2024. Recommendation: We recommend that management of the Organization closely adhere to the HUD guidance requiring deposits. If monthly deposits cannot be made, the Organization should request an exemption form from HUD allowing them to postpone these deposits for a period of time. Views of responsible officials and planned corrective actions: Management is in agreement with the finding. See Corrective Action Plan.