Finding Text
Finding reference number: #2023-001
Assistance Listing title and number (Federal award identification number and year): Supportive Housing for the Elderly, Assistance Listing No. 14.157 (Project identification number 143-EE060-WAH-NP, 2009)
Auditor non-compliance code: N – Reserve for replacement deposits
Finding resolution status: Completed
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: Not applicable
Name of federal agency: U.S. Department of Housing and Urban Development
Pass-through entity: N/A
Questioned costs: $7,000
Statement of condition #2023-001 (Assistance Listing No. 14.157): Effective May 1, 2023, the required monthly deposit to the reserve for replacements is $3,500; however, the Corporation did not make the monthly deposits. As of June 30, 2023, the reserve for replacements is underfunded by $7,000.
Criteria: Pursuant to the Regulatory Agreement, the Corporation shall establish and maintain a reserve for replacements in a separate account and make monthly deposits in amounts as approved in writing by HUD.
Effect or potential effect: The Corporation is not in compliance with the terms of the Regulatory Agreement. At June 30, 2023, the Property's replacement reserve is underfunded by $7,000.
Cause: The reserve for replacement deposits were suspended through April 30, 2023. The monthly deposits did not resume on May 1, 2023 as required by HUD.
Recommendation: Management should transfer $7,000 from the operating account to bring the reserve for replacements current.
Completion date: August 18, 2023
Management's response: Agreed. Management made a deposit to the reserve for replacement on August 18, 2023 for $7,000.