Finding Text
Federal Agency: U.S. Department of Agriculture
Federal Program Title: Rural Rental Housing Loans
Federal Assistance Listing Number: 10.415
Federal Award Identification Number(s) and Year(s):
AMAS000000191197-2018,
AMAS000000191198-2018,
AMAS000000191199-2018,
AMAS000000315075-2018,
AMAS000000017171-2017,
AMAS000000017172-2017
Award Period: 01/01/23 to 12/31/23
Type of Finding:
Significant Deficiency in Internal Control over Major Federal Programs
Criteria or Specific Requirement: Funds collected as a security deposit shall be kept separate from other funds and shall remain equal to or exceed the outstanding obligations. Management or another appropriate individual should review to ensure adequate funding.
Condition: During our testing of the six Rural Development projects, we noted six had no documented review to ensure adequate funding.
Context: Each of the six Rural Development projects were reviewed to ensure proper funding and review over security deposits, and six were noted with no indication of review.
Cause: The Organization tracks security deposits for tenants but does not have a documented review process to verify the accounts are adequately funded.
Effect: Potential for insufficient funds to remit all security deposits to tenants.
Repeat Finding: Yes.
Recommendation: The Organization should review security deposits as a part of month-end close procedures.
Views of Responsible Officials and Planned Corrective Actions: No disagreement with the finding.
The Organization will implement a review step during the tracking of security deposits to verify the security deposit asset is equal to or greater than the security deposit liability and will correct any that are underfunded.