FAC Explorer

Finding 556077 (2024-006)

Significant Deficiency
Requirement
P
Questioned Costs
-
Year
2024
Accepted
2025-04-28
Audit: 354776
Organization: Pembroke Housing for the Elderly, Inc. (NH)
Auditor: Leone McDonnell & Roberts P A

AI Summary

  • Core Issue: The Property is not using its replacement reserves as intended, leading to cash flow problems.
  • Impacted Requirements: The replacement reserve should be used for extraordinary maintenance and repair costs, but it remains underutilized.
  • Recommended Follow-Up: Establish a procedure to regularly assess and utilize replacement reserve funds in line with HUD guidelines.

Finding Text

Information on universe/sample size: It was noted during testing that the Property is not utilizing the replacement reserves for its main purpose. Identification of repeat finding: No Condition: The Property should be utilizing its restricted funds from the replacement reserve. Criteria: The replacement reserve is to aid in funding extraordinary maintenance and repair costs of the property. Effect: Cash flow issues for the property, with high balances in the replacement reserve. Context: Auditor noted low operating cash balances and high related party payables, but a significant balance for the replacement reserve account. Cause: Significant turnover at the management agent and lack of monitoring/review. Recommendation: Regularly assess reserve balances and implement a procedure in order to consistently utilize the funds of the replacement reserve as outlined by HUD.

Corrective Action Plan

Please see below the new process ensuring replacement reserve requests are being made in a timely manner: 1) Quarterly Assessment: Quarterly review are now in place to assess reserve balances and ensure funds are used for necessary repairs. Monthly cash flow reports will align reserve balances with property needs. Formal Utilization Procedure: A written procedure has been established for requesting and using replacement reserve funds. This includes clear guidelines, approval workflows, and thresholds for reserve levels based on property needs. 3) Monitoring & Reporting: Periodic audits will ensure funds are spent according to HUD guidelines. 4) Staff Training & Oversight: Staff will receive training on proper reserve management, and management will increase oversight to ensure funds are used appropriately. Completion Date: 6/30/2025 Contact: Jackie Oliveira-Director of Affordable Housing

Categories

Subrecipient Monitoring HUD Housing Programs

Other Findings in this Audit

  • 556069 2024-002
    - Repeat
  • 556070 2024-003
    - Repeat
  • 556071 2024-002
    - Repeat
  • 556072 2024-003
    - Repeat
  • 556073 2024-004
    Significant Deficiency Repeat
  • 556074 2024-004
    Significant Deficiency Repeat
  • 556075 2024-005
    Significant Deficiency Repeat
  • 556076 2024-005
    Significant Deficiency Repeat
  • 556078 2024-006
    Significant Deficiency
  • 556079 2024-007
    Material Weakness
  • 556080 2024-007
    Material Weakness
  • 1132511 2024-002
    - Repeat
  • 1132512 2024-003
    - Repeat
  • 1132513 2024-002
    - Repeat
  • 1132514 2024-003
    - Repeat
  • 1132515 2024-004
    Significant Deficiency Repeat
  • 1132516 2024-004
    Significant Deficiency Repeat
  • 1132517 2024-005
    Significant Deficiency Repeat
  • 1132518 2024-005
    Significant Deficiency Repeat
  • 1132519 2024-006
    Significant Deficiency
  • 1132520 2024-006
    Significant Deficiency
  • 1132521 2024-007
    Material Weakness
  • 1132522 2024-007
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.157 Supportive Housing for the Elderly $4.82M