Finding Text
Condition - The reserve for replacements account was not maintained by management and is underfunded by $134,290 at June 30, 2023.
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 maintain a reserve for replacements account and deposit $1,031 into the account on a monthly basis.
Effect - The Company was not in compliance with the above HUD regulations.
Cause - The reserve for replacements account was closed during the management agent transfer process and a new account was not opened and was not adequately funded by the new management agent during the year.
Recommendation - We recommend that a reserve for replacements account be opened and the delinquent deposits totaling $134,290 at June 30, 2023 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: Management opened a reserve for replacements account on October 17, 2023 and have deposited the underfunded amount of $134,290.