Finding 946404 (2023-001)

Criteria The non-profit Organization as mortgagor, in accordance with the regulatory agreement, is required to maintain a reserve for replacements. The required minimum monthly deposit into this account is $2,079. Additionally, the non-profit Organization is required to deposit all prior year required delinquent deposits. For the year ended September 30, 2023, a total of $54,061 was to be deposited into the replacement reserve account, which consists of $49,904 for 2023 deposits and 2022 deposits, plus $4,157 for 2021 delinquent deposits; however, no deposits were made into the replacement reserve account. Condition The non-profit Organization did not make all required deposits into the replacement reserve account per the regulatory agreement. Cause Due to limited cash flow management was unable to fulfill all required deposits. Questioned Costs None noted. Context When performing our audit, we noted the non-profit Organization did not make all required deposits in the current year. Effect The non-profit Organization did not make the deposits into the replacement reserve account as required by the HUD agreement. Repeat Finding Repeat Finding of 2022-001 and 2021-001. Recommendation We recommend management make the required deposit as soon as possible and review the activity in the reserve accounts monthly to determine that deposits are being made as required. Views of Responsible Official and Planned Corrective Action Management concurs with the audit finding. Management will transfer the funds as soon as cash flow permits.