Criteria
Tenant lease files are required to be maintained and tenant eligibility determined in accordance with
HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs.
Condition
In connection with our lease file review, we noted the following deficiencies:
- 1 out of 1 lease files for new tenants did not follow EIV guidelines, no EIV report was generated
for move-in certification.
- 3 out of 11 lease files for existing tenants did not follow EIV guidelines, EIV reports were
generated outside of the allowed 120-day period.
- 3 out of 11 lease files for existing tenants did not contain necessary documentation, files were
missing gross rent change forms and latest executed versions of HUD-50059 form.
Cause
Management's policies with respect to the determination of eligibility and the maintenance of tenant
lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs were not consistently followed.
Effect or Potential Effect
The procedures for eligibility and maintaining tenant lease files were not consistently applied in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent
subsidies paid by HUD.
Recommendations
Management should establish procedures and monitor compliance with those procedures to ensure
that tenant eligibility is correctly determined and that tenant lease files are properly maintained in
accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs.
Auditor Noncompliance Code:
Z. Other View of Responsible Officials
Management agrees with the finding and has implemented the below policies and will continue to
train, and connect our team members with the in house HUD Compliance Specialist for support.
1. Move in EIV's - All move in files will be sent to our in house compliance department and
Franklin Group has an EIV specialist how follows and tracks all moves for accuracy for all
move files and the EIV specialist also sends out the 90 day reminders for all move in.
2. Existing Tenant EIV - It is the policy that all existing tenant EIV & 120-day reports are run
per the 4350 guidelines. The Community Manager for Renaissance Gardens has been
provided the HUD Trainings and have noted on her daily task reminder from One Site to pull
all reports as required. The RM is required during monthly visits to spot check at least 5
existing tenants.
3. Gross Rent Change & Medical Reporting - The policy states that all Gross Rent Changes
are to be completed as approved by the new rent schedule - The Community Manager is
required to scheduled appointments with all residents to sign the effective gross rent change
and file in tenants files, it is also required that residents 50059s are signed and in the file,
the Community Manager has taken the latest HUD training with our in house HUD
Compliance Manager- The Regional Manager will also spot check files to be certain that all
Gross Rent Changes are in it's 6 part file folders. Medical reporting records were discussed
in our HUD Compliance Training and all expenses must be in the 6-part file folder. Again,
the RM will continue to spot check files during the monthly required inspections. All HUD
Communities were required to participate in the HUD Training as a reminder tool.
4. Security Deposit - Franklin Companies has a policy that all security deposit refunds must be
submitted within the 3 days move out period. This situation was due to the changeover in
Management.
Finding Resolutions Status: Resolved
Criteria
Tenant lease files are required to be maintained and tenant eligibility determined in accordance with
HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs.
Condition
In connection with our lease file review, we noted the following deficiencies:
- 1 out of 1 lease files for new tenants did not follow EIV guidelines, no EIV report was generated
for move-in certification.
- 3 out of 11 lease files for existing tenants did not follow EIV guidelines, EIV reports were
generated outside of the allowed 120-day period.
- 3 out of 11 lease files for existing tenants did not contain necessary documentation, files were
missing gross rent change forms and latest executed versions of HUD-50059 form.
Cause
Management's policies with respect to the determination of eligibility and the maintenance of tenant
lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs were not consistently followed.
Effect or Potential Effect
The procedures for eligibility and maintaining tenant lease files were not consistently applied in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent
subsidies paid by HUD.
Recommendations
Management should establish procedures and monitor compliance with those procedures to ensure
that tenant eligibility is correctly determined and that tenant lease files are properly maintained in
accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs.
Auditor Noncompliance Code:
Z. Other View of Responsible Officials
Management agrees with the finding and has implemented the below policies and will continue to
train, and connect our team members with the in house HUD Compliance Specialist for support.
1. Move in EIV's - All move in files will be sent to our in house compliance department and
Franklin Group has an EIV specialist how follows and tracks all moves for accuracy for all
move files and the EIV specialist also sends out the 90 day reminders for all move in.
2. Existing Tenant EIV - It is the policy that all existing tenant EIV & 120-day reports are run
per the 4350 guidelines. The Community Manager for Renaissance Gardens has been
provided the HUD Trainings and have noted on her daily task reminder from One Site to pull
all reports as required. The RM is required during monthly visits to spot check at least 5
existing tenants.
3. Gross Rent Change & Medical Reporting - The policy states that all Gross Rent Changes
are to be completed as approved by the new rent schedule - The Community Manager is
required to scheduled appointments with all residents to sign the effective gross rent change
and file in tenants files, it is also required that residents 50059s are signed and in the file,
the Community Manager has taken the latest HUD training with our in house HUD
Compliance Manager- The Regional Manager will also spot check files to be certain that all
Gross Rent Changes are in it's 6 part file folders. Medical reporting records were discussed
in our HUD Compliance Training and all expenses must be in the 6-part file folder. Again,
the RM will continue to spot check files during the monthly required inspections. All HUD
Communities were required to participate in the HUD Training as a reminder tool.
4. Security Deposit - Franklin Companies has a policy that all security deposit refunds must be
submitted within the 3 days move out period. This situation was due to the changeover in
Management.
Finding Resolutions Status: Resolved
Criteria
1. Management is responsible for the design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error.
2. Management is responsible for timely submission of audited financial statements to Federal
Audit Clearinghouse ("FAC").
Condition
1. The accounting records required numerous material adjustments to be proposed and recorded
in order for the financial statements to be fairly presented in accordance with generally accepted
accounting principles in the United States of America.
2. Single Audit reports are required to be submitted to the FAC pursuant to the audit requirement
of Title 2 U.S. Code of Federal Regulations Part 200. Submission of June 30, 2023 financial
statements was not completed within specified time frame.
Cause
Management did not have sufficient controls over financial reporting.
Effect or Potential Effect
Condition 1 may lead to inaccurate financial reporting and potential misstatement of the financial
statements such that they are not in accordance with accounting principles generally accepted in
the United States of America. Condition 2 results in auditee being designated as not a low-risk
auditee, which may have an effect on future federal grants and program eligibility.
Recommendation
1. Management should undertake a review of internal controls over financial reporting and ensure
that financial data is properly recorded in the books and records of the project to prevent
misstatements from occurring in the future.
2. Management should implement procedures to ensure that required filing is completed timely.
Auditor Noncompliance Code
S. Internal control deficiencies
Views of Responsible Officials
1. Management agrees with the finding and recommendation and has implemented
reviews of the financial statements by senior management prior to closing books to
ensure accuracy of information.
2. Management agrees with the finding and recommendation and will ensure required filing
is completed timely.
Finding Resolution Status: Resolved
Criteria
1. Management is responsible for the design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error.
2. Management is responsible for timely submission of audited financial statements to Federal
Audit Clearinghouse ("FAC").
Condition
1. The accounting records required numerous material adjustments to be proposed and recorded
in order for the financial statements to be fairly presented in accordance with generally accepted
accounting principles in the United States of America.
2. Single Audit reports are required to be submitted to the FAC pursuant to the audit requirement
of Title 2 U.S. Code of Federal Regulations Part 200. Submission of June 30, 2023 financial
statements was not completed within specified time frame.
Cause
Management did not have sufficient controls over financial reporting.
Effect or Potential Effect
Condition 1 may lead to inaccurate financial reporting and potential misstatement of the financial
statements such that they are not in accordance with accounting principles generally accepted in
the United States of America. Condition 2 results in auditee being designated as not a low-risk
auditee, which may have an effect on future federal grants and program eligibility.
Recommendation
1. Management should undertake a review of internal controls over financial reporting and ensure
that financial data is properly recorded in the books and records of the project to prevent
misstatements from occurring in the future.
2. Management should implement procedures to ensure that required filing is completed timely.
Auditor Noncompliance Code
S. Internal control deficiencies
Views of Responsible Officials
1. Management agrees with the finding and recommendation and has implemented
reviews of the financial statements by senior management prior to closing books to
ensure accuracy of information.
2. Management agrees with the finding and recommendation and will ensure required filing
is completed timely.
Finding Resolution Status: Resolved
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs, HUD projects are required to establish and maintain at all times a fully funded
separate bank account for tenant security deposits collected.
Condition
As of June 30, 2024 management has not fully funded the tenant security deposits cash account.
The tenant security deposits cash account was underfunded by $5,819.
Cause
The tenant security deposits liability exceeds the tenant security deposits cash account by $5,819
as of June 30, 2024.
Effect or Potential Effect
Management commingled tenant security deposits with its operating cash and did not have
sufficient cash balance in the tenant security deposits cash account to cover the tenant security
deposits liability as of June 30, 2024.
Questioned Costs
$5,819
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
Management should transfer $5,819 from the operating account in order to fully fund the tenant
security deposits account.
Auditor Noncompliance Code:
M. Security Deposits
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for security funding. Funds have been transferred and will be maintained based on HUD
requirements in a separate account from operating funds.
Finding Resolution Status: Resolved
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs, HUD projects are required to establish and maintain at all times a fully funded
separate bank account for tenant security deposits collected.
Condition
As of June 30, 2024 management has not fully funded the tenant security deposits cash account.
The tenant security deposits cash account was underfunded by $5,819.
Cause
The tenant security deposits liability exceeds the tenant security deposits cash account by $5,819
as of June 30, 2024.
Effect or Potential Effect
Management commingled tenant security deposits with its operating cash and did not have
sufficient cash balance in the tenant security deposits cash account to cover the tenant security
deposits liability as of June 30, 2024.
Questioned Costs
$5,819
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
Management should transfer $5,819 from the operating account in order to fully fund the tenant
security deposits account.
Auditor Noncompliance Code:
M. Security Deposits
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for security funding. Funds have been transferred and will be maintained based on HUD
requirements in a separate account from operating funds.
Finding Resolution Status: Resolved
Criteria
Excess residual receipts funds should be remitted to HUD upon receipt of HUD approval.
Condition
Management received HUD approval to remit excess residual receipts funds in the amount of
$28,043 on June 8, 2022. The funds have not been remitted to HUD as of June 30, 2024.
Cause
Controls were not in place to ensure that excess residual receipts funds were timely remitted.
Effect or Potential Effect
The Organization is not in compliance with the requirements of the Consolidated Appropriations Act
of 2016, governing Residual Receipts for PRAC program.
Questioned Costs
$28,043
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
Management should establish internal controls and procedures to ensure that excess residual
receipts reserve funds are remitted timely.
Auditor Noncompliance Code:
B. Failure to make required residual receipts deposits.
Views of Responsible Officials
Management agrees with the finding and has transferred the residual receipts. We will ensure
transfers are completed going forward.
Finding Resolution Status: Resolved
Criteria
Excess residual receipts funds should be remitted to HUD upon receipt of HUD approval.
Condition
Management received HUD approval to remit excess residual receipts funds in the amount of
$28,043 on June 8, 2022. The funds have not been remitted to HUD as of June 30, 2024.
Cause
Controls were not in place to ensure that excess residual receipts funds were timely remitted.
Effect or Potential Effect
The Organization is not in compliance with the requirements of the Consolidated Appropriations Act
of 2016, governing Residual Receipts for PRAC program.
Questioned Costs
$28,043
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
Management should establish internal controls and procedures to ensure that excess residual
receipts reserve funds are remitted timely.
Auditor Noncompliance Code:
B. Failure to make required residual receipts deposits.
Views of Responsible Officials
Management agrees with the finding and has transferred the residual receipts. We will ensure
transfers are completed going forward.
Finding Resolution Status: Resolved
Criteria
Management fee payments are limited to amounts determined in accordance with the terms of the
HUD approved management agreement.
Condition
During the year ended June 30, 2024, the project paid management fees of $7,598 in excess of the
amount approved by HUD
Cause
There were 2 different management agreements and management did not follow the HUD
approved management agreement when paying management fees from operations.
Effect or Potential Effect
The overpaid amount is an unauthorized distribution and therefore considered to be questioned
costs.
Questioned Costs
$7,598
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
The management company should reimburse the project for overpaid management fee in the
amount of $7,598 and implement procedures to ensure that the management fee paid does not
exceed the amount determined in accordance with the HUD approved management agreement.
Auditor Noncompliance Code:
J. Unauthorized management fees.
Views of Responsible Officials
Management agrees with the finding and is working with ownership on reimbursements to the
property. Management will collect in accordance with HUD going forward.
Finding Resolution Status: Unresolved
Criteria
Management fee payments are limited to amounts determined in accordance with the terms of the
HUD approved management agreement.
Condition
During the year ended June 30, 2024, the project paid management fees of $7,598 in excess of the
amount approved by HUD
Cause
There were 2 different management agreements and management did not follow the HUD
approved management agreement when paying management fees from operations.
Effect or Potential Effect
The overpaid amount is an unauthorized distribution and therefore considered to be questioned
costs.
Questioned Costs
$7,598
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
The management company should reimburse the project for overpaid management fee in the
amount of $7,598 and implement procedures to ensure that the management fee paid does not
exceed the amount determined in accordance with the HUD approved management agreement.
Auditor Noncompliance Code:
J. Unauthorized management fees.
Views of Responsible Officials
Management agrees with the finding and is working with ownership on reimbursements to the
property. Management will collect in accordance with HUD going forward.
Finding Resolution Status: Unresolved
Criteria
Tenant lease files are required to be maintained and tenant eligibility determined in accordance with
HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs.
Condition
In connection with our lease file review, we noted the following deficiencies:
- 1 out of 1 lease files for new tenants did not follow EIV guidelines, no EIV report was generated
for move-in certification.
- 3 out of 11 lease files for existing tenants did not follow EIV guidelines, EIV reports were
generated outside of the allowed 120-day period.
- 3 out of 11 lease files for existing tenants did not contain necessary documentation, files were
missing gross rent change forms and latest executed versions of HUD-50059 form.
Cause
Management's policies with respect to the determination of eligibility and the maintenance of tenant
lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs were not consistently followed.
Effect or Potential Effect
The procedures for eligibility and maintaining tenant lease files were not consistently applied in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent
subsidies paid by HUD.
Recommendations
Management should establish procedures and monitor compliance with those procedures to ensure
that tenant eligibility is correctly determined and that tenant lease files are properly maintained in
accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs.
Auditor Noncompliance Code:
Z. Other View of Responsible Officials
Management agrees with the finding and has implemented the below policies and will continue to
train, and connect our team members with the in house HUD Compliance Specialist for support.
1. Move in EIV's - All move in files will be sent to our in house compliance department and
Franklin Group has an EIV specialist how follows and tracks all moves for accuracy for all
move files and the EIV specialist also sends out the 90 day reminders for all move in.
2. Existing Tenant EIV - It is the policy that all existing tenant EIV & 120-day reports are run
per the 4350 guidelines. The Community Manager for Renaissance Gardens has been
provided the HUD Trainings and have noted on her daily task reminder from One Site to pull
all reports as required. The RM is required during monthly visits to spot check at least 5
existing tenants.
3. Gross Rent Change & Medical Reporting - The policy states that all Gross Rent Changes
are to be completed as approved by the new rent schedule - The Community Manager is
required to scheduled appointments with all residents to sign the effective gross rent change
and file in tenants files, it is also required that residents 50059s are signed and in the file,
the Community Manager has taken the latest HUD training with our in house HUD
Compliance Manager- The Regional Manager will also spot check files to be certain that all
Gross Rent Changes are in it's 6 part file folders. Medical reporting records were discussed
in our HUD Compliance Training and all expenses must be in the 6-part file folder. Again,
the RM will continue to spot check files during the monthly required inspections. All HUD
Communities were required to participate in the HUD Training as a reminder tool.
4. Security Deposit - Franklin Companies has a policy that all security deposit refunds must be
submitted within the 3 days move out period. This situation was due to the changeover in
Management.
Finding Resolutions Status: Resolved
Criteria
Tenant lease files are required to be maintained and tenant eligibility determined in accordance with
HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs.
Condition
In connection with our lease file review, we noted the following deficiencies:
- 1 out of 1 lease files for new tenants did not follow EIV guidelines, no EIV report was generated
for move-in certification.
- 3 out of 11 lease files for existing tenants did not follow EIV guidelines, EIV reports were
generated outside of the allowed 120-day period.
- 3 out of 11 lease files for existing tenants did not contain necessary documentation, files were
missing gross rent change forms and latest executed versions of HUD-50059 form.
Cause
Management's policies with respect to the determination of eligibility and the maintenance of tenant
lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized
Multifamily Housing Programs were not consistently followed.
Effect or Potential Effect
The procedures for eligibility and maintaining tenant lease files were not consistently applied in
accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs. This could result in units being rented to ineligible tenants or errors in the rent
subsidies paid by HUD.
Recommendations
Management should establish procedures and monitor compliance with those procedures to ensure
that tenant eligibility is correctly determined and that tenant lease files are properly maintained in
accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of
Subsidized Multifamily Housing Programs.
Auditor Noncompliance Code:
Z. Other View of Responsible Officials
Management agrees with the finding and has implemented the below policies and will continue to
train, and connect our team members with the in house HUD Compliance Specialist for support.
1. Move in EIV's - All move in files will be sent to our in house compliance department and
Franklin Group has an EIV specialist how follows and tracks all moves for accuracy for all
move files and the EIV specialist also sends out the 90 day reminders for all move in.
2. Existing Tenant EIV - It is the policy that all existing tenant EIV & 120-day reports are run
per the 4350 guidelines. The Community Manager for Renaissance Gardens has been
provided the HUD Trainings and have noted on her daily task reminder from One Site to pull
all reports as required. The RM is required during monthly visits to spot check at least 5
existing tenants.
3. Gross Rent Change & Medical Reporting - The policy states that all Gross Rent Changes
are to be completed as approved by the new rent schedule - The Community Manager is
required to scheduled appointments with all residents to sign the effective gross rent change
and file in tenants files, it is also required that residents 50059s are signed and in the file,
the Community Manager has taken the latest HUD training with our in house HUD
Compliance Manager- The Regional Manager will also spot check files to be certain that all
Gross Rent Changes are in it's 6 part file folders. Medical reporting records were discussed
in our HUD Compliance Training and all expenses must be in the 6-part file folder. Again,
the RM will continue to spot check files during the monthly required inspections. All HUD
Communities were required to participate in the HUD Training as a reminder tool.
4. Security Deposit - Franklin Companies has a policy that all security deposit refunds must be
submitted within the 3 days move out period. This situation was due to the changeover in
Management.
Finding Resolutions Status: Resolved
Criteria
1. Management is responsible for the design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error.
2. Management is responsible for timely submission of audited financial statements to Federal
Audit Clearinghouse ("FAC").
Condition
1. The accounting records required numerous material adjustments to be proposed and recorded
in order for the financial statements to be fairly presented in accordance with generally accepted
accounting principles in the United States of America.
2. Single Audit reports are required to be submitted to the FAC pursuant to the audit requirement
of Title 2 U.S. Code of Federal Regulations Part 200. Submission of June 30, 2023 financial
statements was not completed within specified time frame.
Cause
Management did not have sufficient controls over financial reporting.
Effect or Potential Effect
Condition 1 may lead to inaccurate financial reporting and potential misstatement of the financial
statements such that they are not in accordance with accounting principles generally accepted in
the United States of America. Condition 2 results in auditee being designated as not a low-risk
auditee, which may have an effect on future federal grants and program eligibility.
Recommendation
1. Management should undertake a review of internal controls over financial reporting and ensure
that financial data is properly recorded in the books and records of the project to prevent
misstatements from occurring in the future.
2. Management should implement procedures to ensure that required filing is completed timely.
Auditor Noncompliance Code
S. Internal control deficiencies
Views of Responsible Officials
1. Management agrees with the finding and recommendation and has implemented
reviews of the financial statements by senior management prior to closing books to
ensure accuracy of information.
2. Management agrees with the finding and recommendation and will ensure required filing
is completed timely.
Finding Resolution Status: Resolved
Criteria
1. Management is responsible for the design, implementation, and maintenance of internal
controls relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error.
2. Management is responsible for timely submission of audited financial statements to Federal
Audit Clearinghouse ("FAC").
Condition
1. The accounting records required numerous material adjustments to be proposed and recorded
in order for the financial statements to be fairly presented in accordance with generally accepted
accounting principles in the United States of America.
2. Single Audit reports are required to be submitted to the FAC pursuant to the audit requirement
of Title 2 U.S. Code of Federal Regulations Part 200. Submission of June 30, 2023 financial
statements was not completed within specified time frame.
Cause
Management did not have sufficient controls over financial reporting.
Effect or Potential Effect
Condition 1 may lead to inaccurate financial reporting and potential misstatement of the financial
statements such that they are not in accordance with accounting principles generally accepted in
the United States of America. Condition 2 results in auditee being designated as not a low-risk
auditee, which may have an effect on future federal grants and program eligibility.
Recommendation
1. Management should undertake a review of internal controls over financial reporting and ensure
that financial data is properly recorded in the books and records of the project to prevent
misstatements from occurring in the future.
2. Management should implement procedures to ensure that required filing is completed timely.
Auditor Noncompliance Code
S. Internal control deficiencies
Views of Responsible Officials
1. Management agrees with the finding and recommendation and has implemented
reviews of the financial statements by senior management prior to closing books to
ensure accuracy of information.
2. Management agrees with the finding and recommendation and will ensure required filing
is completed timely.
Finding Resolution Status: Resolved
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs, HUD projects are required to establish and maintain at all times a fully funded
separate bank account for tenant security deposits collected.
Condition
As of June 30, 2024 management has not fully funded the tenant security deposits cash account.
The tenant security deposits cash account was underfunded by $5,819.
Cause
The tenant security deposits liability exceeds the tenant security deposits cash account by $5,819
as of June 30, 2024.
Effect or Potential Effect
Management commingled tenant security deposits with its operating cash and did not have
sufficient cash balance in the tenant security deposits cash account to cover the tenant security
deposits liability as of June 30, 2024.
Questioned Costs
$5,819
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
Management should transfer $5,819 from the operating account in order to fully fund the tenant
security deposits account.
Auditor Noncompliance Code:
M. Security Deposits
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for security funding. Funds have been transferred and will be maintained based on HUD
requirements in a separate account from operating funds.
Finding Resolution Status: Resolved
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs, HUD projects are required to establish and maintain at all times a fully funded
separate bank account for tenant security deposits collected.
Condition
As of June 30, 2024 management has not fully funded the tenant security deposits cash account.
The tenant security deposits cash account was underfunded by $5,819.
Cause
The tenant security deposits liability exceeds the tenant security deposits cash account by $5,819
as of June 30, 2024.
Effect or Potential Effect
Management commingled tenant security deposits with its operating cash and did not have
sufficient cash balance in the tenant security deposits cash account to cover the tenant security
deposits liability as of June 30, 2024.
Questioned Costs
$5,819
Identification as a Repeat Finding
This finding is not a repeat finding.
Recommendations
Management should transfer $5,819 from the operating account in order to fully fund the tenant
security deposits account.
Auditor Noncompliance Code:
M. Security Deposits
View of Responsible Officials
Management agrees with the finding and recommendation and has reviewed the HUD requirement
for security funding. Funds have been transferred and will be maintained based on HUD
requirements in a separate account from operating funds.
Finding Resolution Status: Resolved
Criteria
Excess residual receipts funds should be remitted to HUD upon receipt of HUD approval.
Condition
Management received HUD approval to remit excess residual receipts funds in the amount of
$28,043 on June 8, 2022. The funds have not been remitted to HUD as of June 30, 2024.
Cause
Controls were not in place to ensure that excess residual receipts funds were timely remitted.
Effect or Potential Effect
The Organization is not in compliance with the requirements of the Consolidated Appropriations Act
of 2016, governing Residual Receipts for PRAC program.
Questioned Costs
$28,043
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
Management should establish internal controls and procedures to ensure that excess residual
receipts reserve funds are remitted timely.
Auditor Noncompliance Code:
B. Failure to make required residual receipts deposits.
Views of Responsible Officials
Management agrees with the finding and has transferred the residual receipts. We will ensure
transfers are completed going forward.
Finding Resolution Status: Resolved
Criteria
Excess residual receipts funds should be remitted to HUD upon receipt of HUD approval.
Condition
Management received HUD approval to remit excess residual receipts funds in the amount of
$28,043 on June 8, 2022. The funds have not been remitted to HUD as of June 30, 2024.
Cause
Controls were not in place to ensure that excess residual receipts funds were timely remitted.
Effect or Potential Effect
The Organization is not in compliance with the requirements of the Consolidated Appropriations Act
of 2016, governing Residual Receipts for PRAC program.
Questioned Costs
$28,043
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
Management should establish internal controls and procedures to ensure that excess residual
receipts reserve funds are remitted timely.
Auditor Noncompliance Code:
B. Failure to make required residual receipts deposits.
Views of Responsible Officials
Management agrees with the finding and has transferred the residual receipts. We will ensure
transfers are completed going forward.
Finding Resolution Status: Resolved
Criteria
Management fee payments are limited to amounts determined in accordance with the terms of the
HUD approved management agreement.
Condition
During the year ended June 30, 2024, the project paid management fees of $7,598 in excess of the
amount approved by HUD
Cause
There were 2 different management agreements and management did not follow the HUD
approved management agreement when paying management fees from operations.
Effect or Potential Effect
The overpaid amount is an unauthorized distribution and therefore considered to be questioned
costs.
Questioned Costs
$7,598
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
The management company should reimburse the project for overpaid management fee in the
amount of $7,598 and implement procedures to ensure that the management fee paid does not
exceed the amount determined in accordance with the HUD approved management agreement.
Auditor Noncompliance Code:
J. Unauthorized management fees.
Views of Responsible Officials
Management agrees with the finding and is working with ownership on reimbursements to the
property. Management will collect in accordance with HUD going forward.
Finding Resolution Status: Unresolved
Criteria
Management fee payments are limited to amounts determined in accordance with the terms of the
HUD approved management agreement.
Condition
During the year ended June 30, 2024, the project paid management fees of $7,598 in excess of the
amount approved by HUD
Cause
There were 2 different management agreements and management did not follow the HUD
approved management agreement when paying management fees from operations.
Effect or Potential Effect
The overpaid amount is an unauthorized distribution and therefore considered to be questioned
costs.
Questioned Costs
$7,598
Identification as a Repeat Finding
This is not a repeat finding.
Recommendation
The management company should reimburse the project for overpaid management fee in the
amount of $7,598 and implement procedures to ensure that the management fee paid does not
exceed the amount determined in accordance with the HUD approved management agreement.
Auditor Noncompliance Code:
J. Unauthorized management fees.
Views of Responsible Officials
Management agrees with the finding and is working with ownership on reimbursements to the
property. Management will collect in accordance with HUD going forward.
Finding Resolution Status: Unresolved