Finding 581313 (2023-006)

Finding 2023-006: Special Tests and Provisions Rural Rental Housing Loan – Assistance Listing 10.415 Repeat Finding 2022-005 Noncompliance Criteria: The Authority’s Rural Development Properties are required to make a $20,000 deposit into the replacement reserve annually until the balance in the account is at $200,000 or higher. Further, the Rural Development Properties should have adequate cash balances which exceed the security deposit liability. Condition: During the prior audit, it was noted the Authority had a shortfall in required contributions of $9,943.95. During the current year, the Authority made none of the $20,000 required contributions which resulted in the cumulative deficit of $29,943.95. Cause: As noted in Finding 2023-001, the Rural Development Properties are struggling financially and have limited cash flow. Effect or Potential Effect: The Authority was in noncompliance with the Special Tests and Provisions that govern the program. Recommendation: The Authority must review the financial condition of the program and make budget cuts where possible so the program cash flows. The program should be financially viable on its own but the Authority could use other nonfederal funds to help fund the program at the discretion of the Board of Commissioners. View of the Responsible Officials of the Auditee: The auditee’s management agrees with the finding.