Finding Text
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program: Section 202 Capital Advance and Project Rental Assistance Contract
ALN: 14.157
Award Period: 2024
Type of Finding: Significant Deficiency
Criteria or specific requirement: According to the Regulatory Agreement, “mortgagor will establish
and maintain a reserve fund for replacements in a separate account in a bank…concurrently with the
effective commencement of rental assistance payments under the Project Rental Assistance Contract,
the Mortgagor will deposit an amount…per month unless a different date or amount is approved in
writing by HUD”.
Condition: The Organization did not make all required deposits into the Reserve for Replacements
bank account in a timely manner.
Questioned costs: $7,162
Cause: A process control to ensure the automatic transfer of deposits from the operating account to the
replacements reserve on a monthly basis was not in place.
Effect: Deposits for three of the twelve months of the year were not made timely. Therefore, the
Organization is not in compliance with the Regulatory Agreement.
Recommendation: We recommend management implement a control to ensure the monthly transfer is
completed automatically and in accordance with the Regulatory Agreement.
Views of responsible officials: The Organization agrees with the finding and the recommendation will
be implemented. Controls implemented include scheduling of automatic transfers to our reserve for
replacement savings account as well as updating our treasury standard operating procedures to ensure
funds are available for the transfer.
Condition status: Resolved.
Repeat Finding: No.