Audit 36729

Finding 2022-001 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, 2022 Material Noncompliance with Program Requirements Significant Deficiency Over Compliance 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 bearing-account, 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 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 the eligible family. Identification of Repeat Finding: This finding is not a repeat finding. 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 new accounting staff to ensure that the proper transfers are completed in the future. in September 2022, the security deposits were transferred to a segregated account equaling the amount collected from the eligible family.

Finding 2022-001 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, 2022 Material Noncompliance with Program Requirements Significant Deficiency Over Compliance 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 bearing-account, 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 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 the eligible family. Identification of Repeat Finding: This finding is not a repeat finding. 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 new accounting staff to ensure that the proper transfers are completed in the future. in September 2022, the security deposits were transferred to a segregated account equaling the amount collected from the eligible family.

Finding 2022-001 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, 2022 Material Noncompliance with Program Requirements Significant Deficiency Over Compliance 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 bearing-account, 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 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 the eligible family. Identification of Repeat Finding: This finding is not a repeat finding. 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 new accounting staff to ensure that the proper transfers are completed in the future. in September 2022, the security deposits were transferred to a segregated account equaling the amount collected from the eligible family.

Finding 2022-001 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, 2022 Material Noncompliance with Program Requirements Significant Deficiency Over Compliance 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 bearing-account, 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 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 the eligible family. Identification of Repeat Finding: This finding is not a repeat finding. 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 new accounting staff to ensure that the proper transfers are completed in the future. in September 2022, the security deposits were transferred to a segregated account equaling the amount collected from the eligible family.