U.S. Department of Housing and Urban Development
Section 241(a) Supplemental Loan Insurance Multifamily Rental Housing - Loan Section – Assistance Listing No. 14.151 and 223 (f) Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects - Loan Account – Assistance L...
U.S. Department of Housing and Urban Development
Section 241(a) Supplemental Loan Insurance Multifamily Rental Housing - Loan Section – Assistance Listing No. 14.151 and 223 (f) Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects - Loan Account – Assistance Listing
No. 14.155
Per review of the prior year financial statements, the surplus cash calculation indicated a total deposit of $18,643 was required within 90 days after year end. Per our review of the Berkadia account activity, the full deposit was not made within the required timeframe, therefore was not properly recorded and in accordance with the compliance requirements of HUD. The Deposit was not made until August 7, 2023. The funds were not recorded in a separate general ledger account and were recorded with replacement reserve funds when the deposit was occurred.
Recommendation: The organization should review its internal controls and procedures to ensure any surplus cash identified at year end is timely deposited into residual receipt account. In addition, we recommend Berkadia be instructed to separate the funds from
the other reserve funds.
Explanation of disagreement with audit finding: There is no disagreement with the audit finding.
The action was taken in response to the finding:
The general ledger has been updated as of 03/15/2024 for the 12/31/2023 financials and will be carried forward on the financial statements until it is drawn down to zero. We will work with Berkadia (loan holder) to provide additional reporting if possible. The funds are in a separate account with Berkadia as specified; however, reports drawn from Berkadia’s site are consolidated.
During the initial deposit of the 2022 residual receipts, we encountered trouble identifying our new representative at Berkadia, who could assist us with opening a new account and depositing the funds. Now that we have established this contact, we do not expect to encounter any issues in the future.
We have been provided a detailed report from Berkadia that depicts each reserve and residual receipts balance separately as its account. Per Berkadia's classification, it is a reserve account consolidated from some reports. We will request if they have the reporting ability to separate them further.
Name(s) of the contact person(s) responsible for corrective action: Darryl Yorkman, Controller PRD Management
Planned completion date for a corrective action plan: A request to Berkadia was made on 03/18/2024. Completion: 12/31/2024