Finding Text
2022-001 Reserve for Replacement CFDA #14.157 Supportive Housing for the Elderly - Section 202 Criteria - Owners shall establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally insured depository in an interest-bearing account. All earnings including interest on the reserve must be added to the reserve. An amount as required by HUD will be deposited monthly in the reserve fund (Regulatory Agreement, item 5 A). All disbursements from the reserve must be approved by HUD (24 CFR sections 891.405 and 891.605). Condition - Project failed to fund the required replacement reserve for twelve (12) months. Cause - The Project?s cash flow deficiency was the main reason for the noncompliance. Effect - Required replacement reserve was not complied with during fiscal year 2022. Questioned Cost - None. Context - Failure to make required replacement reserve for twelve (12) months. Recommendation - We recommend that the Organization communicate the cash flow issue with HUD and implement a plan on how the Organization can fund its replacement reserve. View of Responsible Official and Planned Corrective Action - We will complete the deposit for the next several months as funds were not sufficient to cover the required deposits then.