Finding 1095415 (2023-001)

Finding 2023-001: Section 811 (Repeat of Finding 2022-001) Criteria: No activity was recorded in the designated tenant security deposit cash account during the fiscal year despite tenant turnover at the property, suggesting commingling of funds. Statement of Condition: No documented evidence shows that funds were properly deposited or disbursed from the tenant security deposit cash account as required by the regulatory agreement. Cause: Lack of segregation and proper oversight of tenant security deposit funds. Effect or Potential Effect: Increased risk of financial inaccuracies and regulatory non-compliance. Recommendation: Implement strict segregation of tenant security deposit funds, conduct regular reconciliations, and establish regular record-keeping practices. Management’s Response: We will reconcile our security deposit cash and security deposit liability contra accounts as part of our month-end close process to ensure transactions are recorded properly.