Residence Connection, Inc.
HUD Project No. 042-HD111
Audit Firm: GBQ Partners LLC
Audit Period: 07/1/22-06/30/23
CAP Prepared by: Donna Jablonski, CEO
A. Current Findings on the Schedule of Findings, Questioned Costs, and
Recommendations.
1. Finding 2023-001 U.S. Department of Housing and Urban Development
Supportive Housing for Persons with Disabilities (Section 811) – CFDA
14.181; Grant period – Year ended June 30, 2023
a. Comments on the Finding and Each Recommendation.
Statement of Condition: Failure to make required deposits to the replacement reserve.
Criteria: In accordance with the regulatory agreement, a monthly deposit in the amount of $455 is required to be made to the replacement reserve account.
Cause: The Project applied for and received an approved distribution from the replacement reserve account for $4,356 in November 2022. In lieu of making a withdrawal from the replacement reserve account for the approved amount, the Project’s sponsor and management company turned off the required monthly deposit until the distribution amount had been matched. The Project’s sponsor experienced turnover in their accounting department during the year which led to the required monthly deposits remaining off.
Effect of Condition: This condition resulted in required deposits to the replacement reserve not properly transferred and reconciliation of the replacement reserve account not properly maintained.
Recommendation: We recommend that the Project’s sponsor reconcile the replacement reserve account and reinstate the required monthly deposit of $55.
b. Action(s) Taken or Planned on the Finding
1. The Project’s sponsor is aware of the requirement to make the required deposits to the replacement reserve account.
2. In July 2023, the replacement reserve account was reconciled and a transfer of $713 was made from the replacement reserve to the operating account to fulfill the approved distribution.
3. Monthly deposits to the replacement reserve were reinstated as of August 1, 2023.