Finding 974389 (2023-002)

AL number: 14.181 Supportive Housing for Persons with Disabilities Finding reference number: 2023-02 - Special Test and Provisions - Replacement Reserve Type of Finding: Reserve for Replacements Deposits Finding Resolution status: See corrective action plan. Criteria: As required by HUD an amount is to be deposited monthly in the reserve fund (Regulatory Agreement, item 5 (a)). The current HUD-9250 requires that the entity make monthly payments of $400 into a reserve fund for replacements held in a separate, federally insured account. Condition: The required $400 monthly deposit to the replacement reserve account was not transferred monthly from January 2022 through August 2022. Questioned costs: None identified. Context and effect: The Entity is required to make a monthly deposit to the replacement reserve account. Cause: The previous accountant who handled these deposits left CLA in Dec 2021. CLA hired a replacement who has been transitioning into the accounting role and responsibilities. Identification as Repeat Finding, if Applicable: This is a repeat finding. Recommendation: The Entity should enhance internal controls to ensure that it follows all regulatory agreement requirements. Responsible Official: Board of Directors, Executive Director Views of Responsible Officials: See corrective action plan.