Audit 397921

Finding Type: Immaterial noncompliance with major program requirements Significant deficiency in internal control over compliance Title and Assistance Listing Number of Federal Program 14.155 Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects Finding Resolution Status Resolved Information on Universe and Population Size The population size was four, which includes all tenant move outs that occurred during the audit period. Sample Size Information A sample size of two was determined based on attribute sampling. Identification of Repeat Finding and Finding Reference Number N/A Criteria HUD requires the Corporation to refund the security deposit to tenants within 30 days of the move out. Statement of Condition The Corporation failed to refund the security deposit to a tenant within 30 days of their move out date. Cause The Corporation failed to monitor the deposit refund requirements for the security deposits as specified by the regulatory agreement. Effect or Potential Effect The tenant did not receive their security deposit refund until 52 days after their move out. Auditor Noncompliance Code M Security Deposits Reporting Views of Responsible Officials Management agrees within the finding as reported. Context The Corporation did not refund the security deposit to a tenant within 30 days of their move out. Recommendation Management should strengthen controls to ensure security deposits are returned within the 30 day requirement. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations Management acknowledged the error that occurred during the year ended December 31, 2025 and has taken measures to change the process of issuing refunds to reduce the likelihood of late refunds. Response Indicator Agree Completion Date July 10, 2025 Response Management acknowledged the noncompliance which occurred during the year ended December 31, 2025, and has reiterated the 30-day HUD requirement to the Corporation’s managing staff and emphasized the importance of timely recording move-outs in the property management software. In addition, management implemented a weekly monitoring review performed by the Senior Accountant to ensure moveouts are processed and security deposits are issued within the required timeframe.