Finding Text
Department of Housing and Urban Development
Finding No. 2024-001; Federal Assistance Listing Number 14.134, Mortgage Insurance - Rental
Housing.
Criteria
According to 24 CFR 891.400(e), residual receipts reserve deposits should be made within 90 days
of year end.
Condition
During the years ended July 31, 2019, 2020, 2021, 2022, 2023 and 2024, management did not
make the required residual receipts reserve deposit in the amount of $81,489 that was required
within 90 days of year ended July 31, 2018, as required by HUD. The residual receipts amount has
not been deposited as of the date of this report.
Cause
Controls were not in place in 2019 to ensure that required residual receipts reserve deposits are
made timely.
Effect or Potential Effect
The Organization is not in compliance with the requirements of the regulatory agreement.
Questioned Costs
None
Context
The annual calculation was not prepared by the management agent, and accordingly, the required
deposit was not made. The auditor notes that the deposit requirement was calculated with the
inclusion of a subsidy receivable due from HUD that was not received until after the 90-day period.
However, we also note that at the time the subsidy was received, the delinquent deposit should
have been made and was not made.
Identification as a Repeat Finding
This finding is a repeat finding (see prior year finding number 2023-001).
Recommendation
Management should establish internal controls and procedures to ensure that required residual
receipts reserve deposits are made timely.
Auditor's Noncompliance Code: B - Failure to make required residual receipts deposits
Finding Resolution Status: Unresolved
Views of Responsible Officials - As of July 31, 2024, the amount due to the residual receipts has not been deposited, until the property is in a positive cash flow position, management is not able to commit to any type of
repayment plan and management is looking for forgiveness on the amount.