Finding Text
Finding Reference Number: 2023-002
Title and Assistance Number of Federal Program: 14.157 Supportive Housing
for the Elderly
Type of Finding: Federal Program Finding (FP)
Finding Resolution Status: IN PROCESS
Information on Universe Population Size: N/A - Not detected as a result of sampling procedures and testing.
Sample Size Information: N/A - Not detected as a result of sampling procedures and testing.
Identification of Repeat Finding and Finding Reference Number: 2022-002
Criteria:
The HUD regulatory agreement requires monthly deposits to the replacement reserve account of $1,351.
Statement of Condition:
Management only made nine (9) of the twelve (12) monthly required reserve deposits, leaving the account underfunded by $4,053 at June 30, 2022; for the year ended June 30, 2023, only $2,702 of the required $16,212 in deposits were made, leaving the account behind schedule by another $13,510, for a total deficiency of $17,563.
Cause:
Management has properly designed controls to ensure all monthly deposits are made; however, the control is not functioning as intended.
Effect or Potential Effect:
The replacement reserve account is underfunded by $17,563.
Auditor Non-Compliance Code: N – Reserve for Replacements Deposits Questioned Costs: $17,563
Details – Questioned Costs by Property
FHA/Contract Number: 127-EE017 S3800-038 Questioned Costs: $17,563
Reporting Views of Responsible Officials:
Senior management has discussed the deficiency with the Project Accountant and Regional Manager. All future deposits to the replacement reserve will be made as required in the regulatory agreement.
Context:
See statement of condition.
Recommendation:
Management should institute a monitoring process to ensure all required monthly deposits to the replacement reserve are made. Such processes could include initiating automatic recurring monthly transfers with the financial institution that maintains the replacement reserve account.
Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations:
Management agrees with the finding, and has taken corrective actions which include communication with the Project Accountant and Regional Manager. All future deposits the replacement reserve will be made as required in the regulatory agreement assuming there is sufficient cash in the operating account to make the deposit.
Response Indicator: Agree (A) Completion Date: March 29,2024
Response:
Management agrees with the finding, and has taken corrective actions which include communication with the Project Accountant and Regional Manager. All future deposits the replacement reserve will be made as required in the regulatory agreement.