Audit 380384

Finding 2025-001, Rent Deposits Criteria: The federal program 14.181 requires that all receipts of the project shall be deposited in the name of the project in a bank, and the funds must be used exclusively for the benefit of the project. Condition and Context: Resident rents collected by the Sponsor were not transferred to the Organization monthly. Cause: There was turnover in staff, and the new staff was not aware of the requirement. Effect: The Organization was not in compliance with program requirements. Identification as a repeat finding: Yes. Questioned costs: None. Recommendation: We recommend that the Organization’s sponsor transfer tenant rent to the Organization monthly. View of responsible officials: Management acknowledges the finding and confirms that corrective measures are being implemented to ensure compliance. - A catch-up adjustment will be made to transfer previously unremitted resident rents to the Organization. - Monthly transfers of resident rent collections will be established. - The Financial Close and Compliance Checklist for the Organization has been updated to include this process, ensuring that transfers are reconciled and reviewed quarterly. - Staff training has been initiated to reinforce awareness of HUD compliance requirements and the importance of timely and accurate fund transfers. Management is committed to maintaining full compliance with HUD regulations under Program 14.181. The implemented procedures are designed to prevent recurrence and ensure that all project receipts are properly deposited and used exclusively for the benefit of the project. Management will continue to monitor this process and make adjustments as necessary, especially during annual contract renewals. Estimated completion date: February 2026