Finding Text
Condition - The reserve for replacements account is underfunded by $21,000 for the year ended December 31, 2022.
Criteria - As part of Special Tests and Provisions related to Assistance Listing Number 14.157-Supportive Housing for the Elderly, the Company is required to deposit $3,000 in a reserve for replacements account on a monthly basis.
Effect - The Company was not in compliance with the above HUD regulations.
Cause - The reserve for replacements account was not adequately funded during the year.
Recommendation - We recommend that the delinquent deposit totaling $21,000 for the year ended December 31, 2022 be deposited into the reserve for replacements account as soon as possible.
Management’s Reply - (a) Comments on the finding and recommendation: Management agrees with the finding. Management also agrees with the recommendation, please see below for action taken.
(b) Action taken: The Company currently does not have enough operating funds to deposit the underfunded amount of $21,000 into the reserve for replacements account. Management will deposit funds after registering with HUD and the receipt of HAP.