Audit 12267

Finding 2023-001 U.S. Department of Housing and Urban Development Supportive Housing for Persons with Disabilities (Section 811) – Assistance Listing 14.181; Grant period – Year ended June 30, 2023 Material Noncompliance with Program Requirements Significant Deficiency Over Compliance: Special Tests and Provisions Statement of Condition: Security deposits were not placed into a segregated account. Criteria: The HUD Handbook 4350.3 Occupancy Requirements of Subsidized Multifamily Housing Programs requires that the owner must place security deposits in a segregated, interest bearingaccount, the balance of which must at all times be equal to the total amount collected from the eligible family plus any accrued interest. Cause of Condition: The Project’s sponsor and management company experienced turnover in their accounting department during the year which caused a shift in assigned duties and responsibilities. During that shift in assigned duties there was a lapse in assigned responsibility for the reconciliation and transfer of security deposits. Effect of Condition: This condition resulted in required security deposits not being transferred to a segregated account causing the balance to be unequal to the amount collected from eligible families. Identification of Repeat Finding: This finding is a repeat finding of Finding 2022-001 reported in the audit for the year ended June 30, 2022. Recommendation: We recommend that the Project’s sponsor verify, on a monthly basis, the required security deposit asset and liability account equal. Management’s Response: The Project’s sponsor is aware of the requirement to move eligible family deposits into a segregated account and are working with the accounting staff to ensure that the proper transfers are completed in the future. In July 2023, the security deposits were reconciled and the correct amount was transferred to a segregated account equaling the amount collected from eligible families.

Finding 2023-001 U.S. Department of Housing and Urban Development Supportive Housing for Persons with Disabilities (Section 811) – Assistance Listing 14.181; Grant period – Year ended June 30, 2023 Material Noncompliance with Program Requirements Significant Deficiency Over Compliance: Special Tests and Provisions Statement of Condition: Security deposits were not placed into a segregated account. Criteria: The HUD Handbook 4350.3 Occupancy Requirements of Subsidized Multifamily Housing Programs requires that the owner must place security deposits in a segregated, interest bearingaccount, the balance of which must at all times be equal to the total amount collected from the eligible family plus any accrued interest. Cause of Condition: The Project’s sponsor and management company experienced turnover in their accounting department during the year which caused a shift in assigned duties and responsibilities. During that shift in assigned duties there was a lapse in assigned responsibility for the reconciliation and transfer of security deposits. Effect of Condition: This condition resulted in required security deposits not being transferred to a segregated account causing the balance to be unequal to the amount collected from eligible families. Identification of Repeat Finding: This finding is a repeat finding of Finding 2022-001 reported in the audit for the year ended June 30, 2022. Recommendation: We recommend that the Project’s sponsor verify, on a monthly basis, the required security deposit asset and liability account equal. Management’s Response: The Project’s sponsor is aware of the requirement to move eligible family deposits into a segregated account and are working with the accounting staff to ensure that the proper transfers are completed in the future. In July 2023, the security deposits were reconciled and the correct amount was transferred to a segregated account equaling the amount collected from eligible families.