Finding 1077988 (2023-003)

1.Condition: Prior to the transition in management agents, the Corporation failed to deposit surplus cash of $121 into the residual receipts reserve account as required for the previous fiscal year ending December 31, 2022. 2. Cause: Under the previous management, internal controls over the timely remission of surplus cash were ineffective, resulting in the failure to identify and make the required deposit. 3. Criteria: According to the Corporation's Regulatory Agreement, it is mandatory to deposit surplus cash into the residual receipts reserve. This requirement ensures that surplus funds are appropriately allocated and managed in compliance with HUD regulations. 4. Effect: The Corporation's failure to deposit the surplus cash constitutes non-compliance with its Regulatory Agreement. This non-compliance can lead to potential penalties and increased scrutiny from HUD. 5. Recommendation: The Corporation should immediately transfer the delinquent surplus cash to the residual receipts reserve account. Furthermore, it is recommended that the Corporation implement robust internal controls to ensure that all future deposits are made promptly and in compliance with the Regulatory Agreement. 6. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the audit finding and is currently in the process of transferring the overdue amount to the residual receipts reserve account. Additionally, management is implementing enhanced internal controls to prevent such occurrences in the future.