Finding Text
Condition - The reserve for replacements account is underfunded by $4,749 for the year ended December 31, 2022. A withdrawal of $7,516 was made without HUD approval. Criteria - HUD requires that the reserve for replacements account to be funded by $1,583 monthly and that all withdrawals require HUD approval. Effect - The Corporation was not in compliance with the above HUD regulations. Questioned Cost - $7,516 Cause - The reserve for replacements account was not funded for three months during the year due to poor cash flow and a withdrawal was made without prior HUD approval to support cash flow. Recommendation - We recommended that the delinquent deposits totaling $4,749 for the year ended December 31, 2022 be deposited into the reserve for replacements accounts as soon as possible. We also recommend that approval is obtained for any withdrawals from the reserve for replacement in accordance with HUD guidelines. Management?s Reply - Management will deposit the amount of $4,749 as soon as cash flow permits. Management will obtain HUD?s approval for any withdrawals from reserve for replacements.