Finding Text
Finding 2023-004
Type of Finding: Significant deficiency in internal control over compliance and immaterial noncompliance.
Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181)
Compliance Requirements: Special Tests and Provisions – Replacement Reserve
Criteria: Afiya Apartments, Inc.’s regulatory agreement with HUD requires certain monthly deposits to
the replacement reserve.
Condition: Afiya Apartments, Inc.’s did not make required replacement reserve deposits. The annual
deposits were short by $780 and the replacement reserve account was underfunded by a cumulative
total of $4,199 at year-end.
Cause: There were not proper internal controls in place to ensure the monthly deposits were made as
required.
Effect: The replacement reserve was not funded as required by HUD. It was underfunded by $4,199.
This is considered immaterial noncompliance.
Questioned Costs: None.
Repeat Finding: No.
Context: Not applicable.
Recommendation: We recommend management design and implement internal controls over
compliance to ensure monthly deposits are made to the replacement reserve as required by HUD.
Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.