Finding 977786 (2023-003)

2023-003 – Required Replacement Reserve Deposits Finding Type. Immaterial noncompliance; Significant deficiency in internal control over compliance (Special Tests and Provisions) Federal program U.S. Department of Housing and Urban Development ·   Supportive Housing for the Elderly (ALN# 14.157) ·   Section 8 Housing Assistance Payments (ALN# 14.195) Criteria. Under Section 202 of the National Housing Act of 1959, Project management is responsible for making monthly deposits to the reserve for replacements account, as approved by HUD. Condition. Out of 12 required monthly deposits, 3 deposits were not made in the correct amount as approved by HUD. Cause. Management has not properly implemented internal control procedures to ensure deposits are made in the correct amount on monthly basis as approved by HUD. Effect. As a result of this condition, the reserve for replacements account was underfunded during 2023. Questioned Costs. No costs are required to be questioned as a result of this finding, inasmuch as no unallowable expenditures were noted. Recommendation. We recommend that management make the required deposit each month as required by HUD. View of Responsible Officials. Management agrees with this comment and has prepared a corrective action plan.