Finding Text
Finding No. 2022-1 Statement of Condition During the year ended June 30, 2022, the project did not make the required monthly deposits to the replacement reserve in the amount of $3,000. Criteria The regulatory agreement requires that the project make monthly deposits to its replacement reserve in the amount of $1,000. Cause Insufficient cash flow caused the replacement reserve to be underfunded. Questioned Costs $3,000 Effect Failure to make monthly payments resulted in an underfunding the replacement reserve and a violation of the regulatory agreement. Auditor Noncompliance Code N ? Reserve for replacements deposits Recommendations Management should ensure all monthly required deposits to the replacement reserve are made in a timely manner. Views of Responsible Officials Management agrees with the finding and has requested approval from HUD to withdraw funds from the residual receipts reserve to fund current deficits. As disclosed in Note 13, the Trustees are working on replacing the current Board Members of the Corporation.