Finding Text
Condition: The Project did not make timely replacement reserve deposits for 12 of the 12 required monthly deposits for the calendar year ended December 2022, as required by the regulatory agreement. Criteria: Per the regulatory agreement, HUD requires the Project to make equal monthly deposits of $750 for an annual total of $9,000. Effect:
For the year ended December 31, 2022 the replacement reserve account is underfunded. A total of $7,500 was deposited into the replacement reserve account for the year 2022 leaving a shortage of $1,500.
The Project was not compliant with the HUD regulatory agreement to deposit timely monthly required deposits into the replacement reserves account.
Questioned Costs: $ --
Context:
All activity for the replacement reserve account was traced and it was determined that the required monthly deposits were not timely deposited. It was determined that 12 out of the 12 monthly deposits were not timely deposited in accordance with the regulatory agreement.
Due to the unexpected administrative burden caused by COVID the Project did not timely deposit the monthly replacement reserves as required by the regulatory agreement.
Cause:
The Project was making adjustments to handle the administrative burden that occurred due to COVID, which affected its policies and procedures.
Recommendation:
The Project should fund the shortage as soon as possible and make the required timely monthly deposits in accordance with the regulatory agreement.
View of Responsible Officials and Planned Corrective Actions:
The Project agrees with this finding and will adhere to the corrective action plan on page 32 in this audit report.
Response:
The late deposits were caught up by May 2023.
The Project did not make all 12 monthly deposits of $750 for an annual contribution of $9,000 to the replacement reserve account as required by the regulatory agreement. During 2022, 2 deposits of $750 were catch up deposits from 2021. 10 deposits were made for the year 2022. Replacement reserve deposits were short $1,500 for the calendar year ended December 31, 2022.