Finding Text
Finding 2022-002 - Reserve for Replacement Repeat Finding: Yes, 2021-002 Criteria: The Center did not pay reserve for replacement payments timely, in violation of section 3-5 of the Consolidated HUD Audit Guide. Condition: Procedures must be in place to ensure that the reserve for replacement deposits are made timely. Cause: The Center did not have the necessary cash flow to pay the April 2020 through December 2022 reserve for replacement payments. Effect: The payments were late in 2022 and the Center incurred no additional interest for deposits being late. Compliance Code: N Recommendation: The auditee must implement procedures to ensure that the reserve for replacement amounts are paid by the due date. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and recommendation. In May 2023, the Center closed on the asset purchase agreement and the proceeds were used to payoff all outstanding balances.