What does the term “not fully funded” mean when referring to replacement reserves?

When a reserve is not fully funded, the amount of cash in the reserve account is less than should have accumulated from the annual provision transfers and interest earned, less approved expenditures. Reserves that aren’t fully funded occur when housing providers do not transfer the annual provision as required to the reserve, or cash in the reserves are used for unauthorized expenditures.

Your auditor must provide a statement saying the reserves are fully funded as required under the terms of your operating agreement. If reserves are not fully funded, BC Housing will contact you to find out how the discrepancy occurred and what steps you’re taking to fund the reserves to the appropriate level.