Westminster Towers, Incorporated

Federal Award Finding and Questioned Costs U.S. Department of Housing and Urban Development Direct award Program Name: Supportive Housing for the Elderly, Section 202 Direct Loans, CFDA Number 14.157 Grantor?s Number: NA Finding 2019-001: Replacement Reserve Account Significant Deficiency over Compliance: Cash Management Universe Population Size: $161,637 Sample Size: $161,637 Criteria: Under the terms of the regulatory agreement, Westminster Towers, Inc. Geneva Plaza HUD Project No. 122-EH001 (Project) is required to transfer surplus cash from the revenue account to the replacement reserve account within 60 days. Condition: During the year ended June 30, 2019, the Project failed to transfer surplus cash deposits totaling $161,637 from the year ended June 30, 2018 into the reserve account. Cause: The failure to transfer the prior year surplus receipts was caused by an oversight of the managing agent. Effect or Potential Effect: The impact of failing to transfer the prior year surplus cash is to understate the replacement reserve account by $161,637 and the related interest that should have been earned, estimated to be approximately $160. This puts the Project in non-compliance with the HUD regulatory agreement. Auditor Non-Compliance Code: B ? Failure to make required residual receipts deposits. Views of responsible officials and planned corrective actions: The Project agrees with the finding; please refer to corrective action plan beginning on page 34. Questioned Costs: No questioned costs were identified as a result of this compliance finding. Recommendation: We recommend the Project implement a new procedure whereby each year the replacement reserve is transferred on a set date within the 60-day requirement to ensure compliance with the cash management provisions of the regulatory agreement. Auditor?s Summary of Auditee?s Comments on the Findings and Recommendations: The Project?s corrective action plan appears to be sufficient to remedy this compliance finding.