Finding Text
Reference Number: 2022-002 (S3800-010) Title and CFDA Number of Federal Program: Supportive Housing for the Elderly, Assistance Listing Number 14.157 (S3800-011) Type of Finding: Federal Award Finding (S3800-015) Finding Resolution Status: Unresolved (S3800-016) Information on Universe Population Size: Not applicable (S3800-017) Sample Size Information: Not applicable (S3800-018) Identification of Repeat Finding Reference Number: 2021-002 (S3800-019) Criteria: In accordance with the regulatory agreement, replacement reserve funds whether (S3800-020) in the form of a cash deposit or invested in obligations of, or fully guaranteed as to principal by, the United States of America. Statement of Condition: Replacement reserve funds were invested in obligations other than in (S3800-030) accordance with the regulatory agreement. Cause: Management invested a portion of the replacement reserve funds in mutual (S3800-032) funds in an effort to generate higher investment income. Effect or Potential Effect: The effect of this deficiency, which cannot be quantified, is that replacement (S3800-033) reserve funds invested in mutual funds are exposed to various risks such as market and credit risks. Auditor Noncompliance Code: O-Investment for Reserves for Replacements (S3800-035) Questioned Cost: $0 (S3800-040) Reporting Views of Responsible Officials: See management?s response (S3800-150) (S3800-045) ?FHA/Contract Number: 042EE171 (3800-037) ?Questioned Costs: $0 (3800-038) Context: Replacement reserve funds should be deposited in accordance with the (S3800-050) regulatory agreement. Recommendation: We recommend that management invest replacement reserve in obligations (S3800-080) of, or fully guaranteed as to principal by, the United States of America. Auditor?s Summary of the Auditee?s Comments on the Finding and Recommendation: (S3800-090) Management is aware of such market and credit risks and, therefore the Project Sponsor (Good Shepherd Home) is committed to reimburse the Project for any net cumulative realized investment losses that the Project may incur. ?Response Indicator: Disagree (3800-130) Response: (S3800-1500) Management is aware of such market and credit risks and, therefore the Project Sponsor (Good Shepherd Home) is committed to reimburse the Project for any net cumulative realized investment losses that the Project may incur. There is a cumulative net gain through December 31, 2022. Contact Person: Christopher P. Widman (S3800-160 to 180)