Finding Text
Finding 2023-001, Replacement Reserve Deposits (Assistance Listing No. 14.181)
Criteria: The federal program 14.181 requires that the Owner establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally insured depository in an interestbearing account. An amount as required by HUD will be deposited monthly in the reserve fund. Condition and Context: Deposits into the reserve account were not made monthly. The total required deposits were made by the end of the fiscal year, where 3 out of the 12 deposits were made late.
Cause: There was turnover in staff during the year, and the new staff was not aware of the monthly deposit requirement.
Effect: The Organization was not in compliance with the monthly deposit requirement.
Identification as a repeat finding: Yes.
Questioned costs: None.
Recommendation: We recommend that the Project regularly monitors deposits in the reserve for replacement to ensure that it complies with the requirements of 24 CFR sections 891.405 and 891.605 and ensure that personnel in-charge are made aware of the HUD compliance requirements.