Finding No. 2022-001; Section 202, Assistance Listing 14.157 Statement of Condition During the year ended December 31, 2022, the project paid management fees of $2,450 in excess of the amount approved by HUD. Criteria Management fee payments are limited to amounts determined in accordance with the terms of the management agreement. Questioned Costs $2,450 Effect The overpaid amount is a nonallowable expense of the project and therefore considered to be questioned costs. Cause Lack of management oversight caused management fees to be overpaid during the current year. Recommendation The management company should apply the overpaid management fee to a future month's payment or reimburse the property in the amount of $2,450 and implement procedures to ensure that the management fee paid does not exceed the amount determined in accordance with the management agreement. Auditor Noncompliance Code: N ? Special tests and provisions Finding Resolution Status: Resolved.
Finding No. 2022-002; Section 202, Assistance Listing 14.157 Statement of Condition During the year ended December 31, 2022, the project did not make the required monthly deposits to the replacement reserve in the amount of $40,000. The project is required to make monthly deposits to the reserve in the amount of $20,000. Criteria The PRAC requires that the project make monthly deposits to its replacement reserve. Questioned Costs None Effect Failure to make monthly payments resulted in an underfunding the replacement reserve and a violation of the PRAC. Cause Delays in renewal of the PRAC caused delays in HUD's payment of the subsidy portion of income resulting in cash not being available to make the required deposit Recommendation Management should deposit into the replacement reserve the delayed portion when funds are received from HUD. Auditor Noncompliance Code: N ? Special tests and provisions Finding Resolution Status: Resolved.
Finding No. 2022-003; Section 202, Assistance Listing 14.157 Statement of Condition In connection with the procedures applied to a sample of 1 tenant that moved out of the project during the year, we noted management failed to provide the tenant with a refund of their security deposit within thirty days after the move-out. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant's rights under state and local laws. Questioned Costs None Effect Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposit or provide itemized list of charges deducted from the deposit. Cause On tenant move out property management failed to timely notify the accounting staff of the move out and to issue the check to the tenant. Recommendation Management should ensure its policies and procedures related to refunding of tenant security deposits are followed and comply with the thirty-day timeline required by HUD regulations. Auditor Noncompliance Code: N ? Special tests and provisions Finding Resolution Status: In process.
Finding No. 2022-001; Section 202, Assistance Listing 14.157 Statement of Condition During the year ended December 31, 2022, the project paid management fees of $2,450 in excess of the amount approved by HUD. Criteria Management fee payments are limited to amounts determined in accordance with the terms of the management agreement. Questioned Costs $2,450 Effect The overpaid amount is a nonallowable expense of the project and therefore considered to be questioned costs. Cause Lack of management oversight caused management fees to be overpaid during the current year. Recommendation The management company should apply the overpaid management fee to a future month's payment or reimburse the property in the amount of $2,450 and implement procedures to ensure that the management fee paid does not exceed the amount determined in accordance with the management agreement. Auditor Noncompliance Code: N ? Special tests and provisions Finding Resolution Status: Resolved.
Finding No. 2022-002; Section 202, Assistance Listing 14.157 Statement of Condition During the year ended December 31, 2022, the project did not make the required monthly deposits to the replacement reserve in the amount of $40,000. The project is required to make monthly deposits to the reserve in the amount of $20,000. Criteria The PRAC requires that the project make monthly deposits to its replacement reserve. Questioned Costs None Effect Failure to make monthly payments resulted in an underfunding the replacement reserve and a violation of the PRAC. Cause Delays in renewal of the PRAC caused delays in HUD's payment of the subsidy portion of income resulting in cash not being available to make the required deposit Recommendation Management should deposit into the replacement reserve the delayed portion when funds are received from HUD. Auditor Noncompliance Code: N ? Special tests and provisions Finding Resolution Status: Resolved.
Finding No. 2022-003; Section 202, Assistance Listing 14.157 Statement of Condition In connection with the procedures applied to a sample of 1 tenant that moved out of the project during the year, we noted management failed to provide the tenant with a refund of their security deposit within thirty days after the move-out. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant's rights under state and local laws. Questioned Costs None Effect Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposit or provide itemized list of charges deducted from the deposit. Cause On tenant move out property management failed to timely notify the accounting staff of the move out and to issue the check to the tenant. Recommendation Management should ensure its policies and procedures related to refunding of tenant security deposits are followed and comply with the thirty-day timeline required by HUD regulations. Auditor Noncompliance Code: N ? Special tests and provisions Finding Resolution Status: In process.