Finding Text
Finding reference number: 2022-003
Assistance Listing (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing 14.157 (061-EE125 and 2008)
Auditor non-compliance code: A-Unauthorized withdrawal from replacement reserve
Finding resolution status: In Process
Universe population size: The universe population size is not applicable to the finding.
Sample size information: The sample size information is not applicable to the finding.
Statistically valid sample: N/A
Name of Federal agency: U.S. Department of Housing and Urban Development
Pass-through entity: N/A
Questioned costs: $55,000
Statement of condition 2022-003: During prior years, the Board of Directors disbursed funds from the replacement reserve to fund development of other housing developments.
Criteria: Pursuant to the HUD Regulatory Agreement, the Corporation shall not make withdrawals from the reserve for replacements account except after receiving the written consent of HUD and for the purpose of replacing structural elements and mechanical equipment of the Property.
Effect: The Corporation is not in compliance with the terms of the HUD Regulatory Agreement. As of December 31, 2022, the reserve for replacements account is underfunded by $55,000.
Cause: The Board of Directors did not comply with the HUD Regulatory Agreement regarding use of the reserve for replacements.
Recommendation: The Board of Directors should replace the funds that were disbursed from the reserve for replacements without HUD approval.
Completion Date: In Process
Management's response: Agree. The Board of Directors entered into a repayment agreement with HUD beginning in 2023 to repay the unapproved disbursements from the reserve for replacements reserve to the Property.