Finding Text
Federal agency: U.S. Department of Housing and Urban Development
Federal program title: Section 202 Capital Advance
Listing Number: 14.157
Pass-Through Agency: N/A
Pass-Through Number(s): N/A
Award Period: N/A
FAIN number and year: 092-EE024-6-A-05-46 - 1998
Type of Finding: Significant Deficiency in Internal Control over Compliance
Criteria or specific requirement: Per the regulatory agreement a monthly deposit is to be made into the replacement reserve. Per HUD-9250 the monthly amount is $3,395.73 which equates to an annual deposit of $40,749.
Condition: The Project was required to deposit $40,749 into the replacement reserve for the year ended December 31, 2024 and only deposited $23,771.
Questioned costs: $16,978
Context: Management did not make deposits for August-December 2024.
Cause: Managements controls did not identify and correct the lack of payment due to turning off automatic payments, on a timely basis.
Effect: The replacement reserve was underfunded by $16,978 at December 31, 2024.
Repeat Finding: N/A
Recommendation: Recommend that a catchup payment is made as soon possible to make the replacement reserve whole.
Views of responsible officials: No disagreements with the audit finding.
Management Response: A payment of $16,979 was deposited into the account as of March 31, 2025. Automatic payments were re-established to ensure no further issues due to lack of payment.