Audit 399283

Finding Reference Number 2025-001 Statement of Condition At December 31, 2025, the balance in the security deposit bank account is lower than the corresponding liability. Criteria The Project is required to keep a balance of the tenant security deposits bank account equal to or greater than the aggregate of all outstanding security deposit obligations owed to tenants. Effect Failure to keep a balance equal to or greater than the aggregate of all outstanding security deposit obligations results in noncompliance with the regulatory agreement. Cause Due to an error by a third-party vendor, the Property incurred a utility charge that was not included in the budget. To stay current with all accounts payable, the Property used cash from the security deposit account to cover the shortfall. Recommendation We recommend that management deposit $16,674 into the security deposit bank account to fully cover the liability. Management should implement a policy to compare the security deposit bank account to the liability monthly to ensure continued compliance. Auditor Non-Compliance Code M – Security deposits. Amount of Questioned Costs $16,674 Auditor's Summary of Auditee's Comments on the Findings and Recommendations Management agrees with this finding. The Project switched from a third-party vendor during the year and found the prior vendor to be in error with the monthly electric bills. Due to the prior vendor’s error in billing, the Project needed more funding than what was in its budget to adequately pay the prior fees, by no error by the Project. Going forward, management will ensure the security deposit bank account is adequately funded to meet all outstanding security deposit obligations owed to tenants. Response Indicator Agrees Proposed Completion Date December 31, 2026 Actions Taken or Planned on the Finding Management has begun making deposits back to the security deposits bank account to provide adequate funding for all future security deposit obligations.