Cumberland Gardens Housing Development Fund Company, Inc.

Finding 2019-001 Replacement Reserve U.S. Department of Housing and Urban Development CFDA Number Name of the Federal Program 14.157 Supportive Housing for the Elderly Criteria In accordance with the Entity?s regulatory agreement with HUD, only upon approval from HUD can the Entity withdraw funds from the replacement reserve account. Condition The Entity withdrew $19,500 from the replacement reserve without the approval from HUD. Context During our audit, we noted that the Entity withdrew $19,500 twice from the replacement reserve account. Upon questioning management, it appears that the second withdrawal was made in error. Effect The Entity is in violation of the requirements of its regulatory agreement. Cause Internal controls currently in place over the processing of replacement reserve withdrawal requests are not being properly applied in order to prevent withdrawals without approval. Recommendation Although the withdrawal was unintentional and due to human error, we recommend that management evaluate its internal controls and implement policies to mitigate the chances of withdrawing funds from the replacement reserve without HUD approval. Views of responsible officials and planned corrective action See Corrective Action Plan in Appendix A. Section IV ? Prior Year?s Audit Findings There were no prior year audit findings.