Finding Text
Finding 2022-001 ? Material Weakness ? Reserve for Replacement Criteria The Program is required to make monthly deposits to a Reserve for Replacement account in accordance with their regulatory agreement. Condition: The Program did not comply with requirement related to deposits into the reserve for replacement account. The Program made no deposits in the current year, the required deposits in to the reserve for replacement account for the year ended December 31, 2022 were $29,109. Per Rural Development, the ending balance as of December 31, 2022 should be $449,637. Cause: The Program has been unable to provide enough cash flow to make the required reserves and a waiver was not obtained. Effect: Non-compliance with Reserve for Replacement requirements. Repeat Finding: This is a repeat of prior year finding 2021-001. Recommendation: The Program should work with its lender to ensure compliance with the replacement reserve in future periods. Response: The Program agrees with the finding and is trying to work with USDA Rural Development to find ways to increase the cash flows of the property and lease more units.