Finding Text
Section III - Federal Award Findings and Questioned Costs
Finding 2023-001: Significant Deficiency in Internal Control
Federal Program: Section 811 Capital Advance and Project Rental Assistance Contract
Assistance Listing Number: 14.181
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Agency: N/A
Award Number: 033-HH015
Award Year: 2023
Compliance Requirement: Special Tests and Provisions
Questioned Costs: Not Determinable
Criteria: The regulatory agreement that the Corporation maintains with HUD requires monthly
deposits to the reserve for replacement account in an amount agreed to with HUD. This amount
periodically increases and is documented on a HUD Form 9250.
Condition and Context: The Corporation received a Form 9250 in 2022 requiring an increase to the
reserve for replacement deposit effective 9/1/22. The increase was not put in place until February
2023, which resulted in five months of a deficient deposit, totaling $4,750.
Cause: The Corporation lacks a review process for these deposits to ensure all increases are
implemented in a timely manner.
Effect or Potential Effect: As a result of the review process, noncompliance due to error or fraud
could occur without being detected and corrected, timely.
Recommendation: Management should implement a review process for these increases to ensure
they are implemented in a timely manner.
Management's Response: The Corporation will implement a standard review process over these
increases to prevent and detect errors on a timely basis.