Finding Text
Finding 2022-002,_Replacement Reserve Deposits (Assistance Listing No. 14.181) Criteria: The federal program 14.181 requires that the Owner 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. An amount as required by HUD will be deposited monthly in the reserve fund. Condition and Context: Deposits into the reserve account were not made monthly. The total required deposits were made by the end of the fiscal year, where 5 out of the 12 deposits were made late. Cause: There was turnover in staff during the year, and the new staff was not aware of the monthly deposit requirement. Effect: The Organization was not in compliance with the monthly deposit requirement. Identification as a repeat finding: No. Questioned costs: None. Recommendation: We recommend that the Organization create a compliance policy manual that documents compliance requirements. View of responsible officials: To address this issue the monthly replacement reserve bank transfers have been set up in the banking system as ongoing automatic recurring transfers. A separate Financial Close and Compliance Checklist will be put in place for Maple- Claremont and a step is will be added to the to reconcile cash (review and post recurring bank transfer activity) quarterly. An additional step will be added to assess any future changes to the replacement reserve transfer levels when the Contract renews annually.