2023-001 – Special Tests and Provisions - Noncompliance
Information on Federal Program:
U.S. Department of Housing and Urban Development, Award Listing Numbers 14.181.
Criteria:
Part 4 of the May 2023 2 CFR Part 200, Appendix XI, Compliance Supplement, for Award Listing Number 14.181 requires “any surplus funds in the project funds account (including earned interest) at the end of the fiscal year shall be deposited in a federally insured account within 60 days following the end of the fiscal year. Withdrawals from this account may be made only for project purposes and with the approval of HUD (24 CFR section 891.400(e)).”
Conditions:
During our review of the Schedule of Computation of Surplus Cash, we noted that MRCS IV had surplus cash of $2,229. We noted that these funds would be required to be deposited within a federally insured residual receipts within 60 days following the end of the fiscal year. MRCS IV did not deposit surplus funds within 60 days following the end of the fiscal year.
Questioned Costs:
None identified.
Cause:
Funds were not deposited within 60 days as this is the first time surplus funds were available to be deposited.
Effect:
Surplus funds were not deposited timely.
Context:
Since inception, MRCS IV has included the Due to Affiliate account balance within their Schedule of Computation of Surplus Cash, resulting in a deficiency of cash. The Due to Affiliate balance only includes project expenses paid by NYSARC, Inc. Nassau County Chapter, the managing agent of MRCS IV, on behalf of MRCS IV. In 2023, MRCS IV received a notification from the U.S. Department of Housing and Urban Development (HUD) that Due to Affiliate balances shall not be included in the Computation of Surplus Cash/Cash (Deficiency) unless written approval has been received from HUD. As of the date of this report, no written approval has been received resulting in surplus cash.
Recommendation:
We recommend management implements a process to monitor their available cash balances to determine if there is a surplus cash balance at the fiscal year end date within one month of the fiscal year end date to allow for timely deposits into a residual receipts account, as necessary.
Views of Responsible Official and Planned Corrective Action:
MRCS IV agrees with the finding identified. MRCS IV’s response to the finding is described in the accompanying management’s corrective action plan.
2023-002 – Special Tests and Provisions - Noncompliance
Information on Federal Program:
U.S. Department of Housing and Urban Development, Award Listing Numbers 14.181.
Criteria:
24 CFR section 891.435(a) requires “At the time of the initial execution of the lease, the Owner (or Borrower, as applicable) will require each household (or family, as applicable) occupying an assisted unit or residential space in a group home to pay a security deposit in an amount equal to one month’s tenant rent or $50, whichever is greater. The household (or family) is expected to pay the security deposit from its own resources or other available public or private resources. The Owner (or Borrower) may collect the security deposit on an installment basis.”
Conditions:
During our review of the chart of accounts for MRCS IV, we noted that a separate tenant security deposit account did not exist. Per discussion with management, tenant security deposits were never remitted by tenants to MRCS IV.
Questioned Costs:
None identified.
Cause:
Security deposits were not requested from tenants by management.
Effect:
A tenant security deposit account has not been established.
Context:
At inception, MRCS IV submitted for approval to HUD a request to waive the tenant security deposit requirement. Due to the length of time which has passed, MRCS IV has been unable to locate within its records any approval or denial from HUD. As a result, MRCS IV has not requested for tenants to remit a security deposit upon being admitted as a tenant.
Recommendation:
We recommend management implements a process to obtain tenant security deposits from all current tenants and to ensure proper procedures are in place to collect tenant security deposits from all new tenants at the time of initial lease and to refund deposits to tenants upon vacating their unit.
Views of Responsible Official and Planned Corrective Action:
MRCS IV agrees with the finding identified. MRCS IV’s response to the finding is described in the accompanying management’s corrective action plan.
2023-001 – Special Tests and Provisions - Noncompliance
Information on Federal Program:
U.S. Department of Housing and Urban Development, Award Listing Numbers 14.181.
Criteria:
Part 4 of the May 2023 2 CFR Part 200, Appendix XI, Compliance Supplement, for Award Listing Number 14.181 requires “any surplus funds in the project funds account (including earned interest) at the end of the fiscal year shall be deposited in a federally insured account within 60 days following the end of the fiscal year. Withdrawals from this account may be made only for project purposes and with the approval of HUD (24 CFR section 891.400(e)).”
Conditions:
During our review of the Schedule of Computation of Surplus Cash, we noted that MRCS IV had surplus cash of $2,229. We noted that these funds would be required to be deposited within a federally insured residual receipts within 60 days following the end of the fiscal year. MRCS IV did not deposit surplus funds within 60 days following the end of the fiscal year.
Questioned Costs:
None identified.
Cause:
Funds were not deposited within 60 days as this is the first time surplus funds were available to be deposited.
Effect:
Surplus funds were not deposited timely.
Context:
Since inception, MRCS IV has included the Due to Affiliate account balance within their Schedule of Computation of Surplus Cash, resulting in a deficiency of cash. The Due to Affiliate balance only includes project expenses paid by NYSARC, Inc. Nassau County Chapter, the managing agent of MRCS IV, on behalf of MRCS IV. In 2023, MRCS IV received a notification from the U.S. Department of Housing and Urban Development (HUD) that Due to Affiliate balances shall not be included in the Computation of Surplus Cash/Cash (Deficiency) unless written approval has been received from HUD. As of the date of this report, no written approval has been received resulting in surplus cash.
Recommendation:
We recommend management implements a process to monitor their available cash balances to determine if there is a surplus cash balance at the fiscal year end date within one month of the fiscal year end date to allow for timely deposits into a residual receipts account, as necessary.
Views of Responsible Official and Planned Corrective Action:
MRCS IV agrees with the finding identified. MRCS IV’s response to the finding is described in the accompanying management’s corrective action plan.
2023-002 – Special Tests and Provisions - Noncompliance
Information on Federal Program:
U.S. Department of Housing and Urban Development, Award Listing Numbers 14.181.
Criteria:
24 CFR section 891.435(a) requires “At the time of the initial execution of the lease, the Owner (or Borrower, as applicable) will require each household (or family, as applicable) occupying an assisted unit or residential space in a group home to pay a security deposit in an amount equal to one month’s tenant rent or $50, whichever is greater. The household (or family) is expected to pay the security deposit from its own resources or other available public or private resources. The Owner (or Borrower) may collect the security deposit on an installment basis.”
Conditions:
During our review of the chart of accounts for MRCS IV, we noted that a separate tenant security deposit account did not exist. Per discussion with management, tenant security deposits were never remitted by tenants to MRCS IV.
Questioned Costs:
None identified.
Cause:
Security deposits were not requested from tenants by management.
Effect:
A tenant security deposit account has not been established.
Context:
At inception, MRCS IV submitted for approval to HUD a request to waive the tenant security deposit requirement. Due to the length of time which has passed, MRCS IV has been unable to locate within its records any approval or denial from HUD. As a result, MRCS IV has not requested for tenants to remit a security deposit upon being admitted as a tenant.
Recommendation:
We recommend management implements a process to obtain tenant security deposits from all current tenants and to ensure proper procedures are in place to collect tenant security deposits from all new tenants at the time of initial lease and to refund deposits to tenants upon vacating their unit.
Views of Responsible Official and Planned Corrective Action:
MRCS IV agrees with the finding identified. MRCS IV’s response to the finding is described in the accompanying management’s corrective action plan.