Finding 560003 (2023-002)

S3800-010 Finding Reference Number - 2023-002 S3800-011 Title and CFDA Number of Federal Program - Supportive Housing for the Elderly - Section 202 Capital Advance 14.157 S3800-015 Type of Finding - Federal Award Finding S3800-016 Finding Resolution Status - In process S3800-017 Information on Universe Population Size - N/A S3800-018 Sample Size Information - N/A S3800-019 Identification of Repeat Finding and Finding Reference Number - N/A S3800-020 Criteria - The Regulatory Agreement sets forth specific requirements on the establishment and maintenance of various funds (i.e. security deposits, residual receipts, replacement reserve). An amount as required by HUD will be deposited monthly to the replacement reserve. S3800-030 Statement of Condition - The security deposits, residual receipts, and replacement reserve were not properly established in separate bank accounts, and the required monthly deposits to the replacement reserve were not made. S3800-032 Cause - During the year, there was a change in the management agent for Ida B. Wells. The security deposits, residual receipts, and replacement reserve funds held by the previous management agent were transferred to the new management agent’s operating bank account and new bank accounts for these funds had not been opened as of July 31, 2023. S3800-033 Effect or Potential Effect - Ida B. Wells’ is not in compliance with the Regulatory Agreement. S3800-035 Auditor Non-Compliance Code - N – Special Tests and Provisions S3800-040 Questioned Costs - $0 S3800-045 Reporting Views of Responsible Officials - Management agrees with this finding. S3800-037 FHA/Contract number - 017EE058 S3800-038 Questioned Costs - $0 S3800-050 Context - The security deposits, residual receipts, and replacement reserve bank accounts were not set up as of July 31, 2023. Delinquent replacement reserve deposits during the year ended July 31, 2023 were $37,503. S3800-080 Recommendation - We recommend that management establish separate bank accounts for the security deposits, residual receipts, and replacement reserve and make the required deposits. S3800-090 Auditor's Summary of the Auditee's Comments on the Findings and Recommendations - Management will set up separate bank accounts and make the required deposits. S3800-130 Response Indicator - Agree S3800-140 Completion Date - December 15, 2024 S3800-150 Response - Management has established separate bank accounts for the security deposits, residual receipts, and replacement reserve, and required deposits to the replacement reserve have been made.