Finding Text
FEDERAL AWARD FINDINGS:
2024-001 Replacement Reserve Loans Payback
CONDITION:
The Project did not adhere to the terms of the HUD approved loans from the Replacement Reserve. The Replacement Reserve is underfunded by $9,500 as of September 30, 2024.
CRITERIA:
The Project had specific HUD approved terms to pay back the funds withdrawn from the Replacement Reserve.
EFFECT:
The Project is not in compliance with the HUD approved loan payback requirements.
CONTEXT:
Beginning in February 2024, the Project must begin depositing $1,000 per month in addition to its normal replacement reserve funding requirement until the $35,000 loan is paid back in full. Audit procedures for the year ended September 30, 2024 revealed the Project did not make any payments on this loan during the year ended September 30, 2024.
Beginning in February 2024, the Project must begin depositing $1,500 per month in addition to its normal replacement reserve funding requirement until the $79,245 loan is paid back in full. Audit procedures for the year ended September 30, 2024 revealed the Project paid back $10,500 of the required $12,000 that was due to the Replacement Reserve during the year ended September 30, 2024.
CAUSE:
The Project did not effectively budget for the additional required monthly funding obligations to the Replacement Reserve during the year ended September 30, 2024.
RECOMMENDATION:
We recommend that the Project adhere to the payback terms of the HUD approved loans from the Replacement Reserve or negotiate different terms with HUD and obtain approval from HUD.
VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS:
Management acknowledges and agrees with the finding. The Project is working with X-Caliber Capital to get the repayment payments current and will be working on paying extra to get the repayments paid off sooner.