Finding 1147571 (2024-001)

Finding Number 2024-001: Significant Deficiency in Internal Control over Major Federal Program Compliance: Special Tests and Provisions - Residual Receipts Requirements Federal Program: U.S. Department of Housing and Urban Development ALN 14.155 - Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects Condition: The Project did not make the required residual receipt deposits in the amount $174,928 for the year ending June 30, 2023. Criteria: Project management is responsible for depositing funds into the residual receipts account when a surplus cash amount is calculated within 90 days after the close of the fiscal year. Effect: The surplus cash amount was not deposited therefore making the balance in the residual receipts account understated and not correctly showing amount subject to HUD recapture. Cause: Procedures to deposit surplus cash into the residual receipts account were not followed. Recommendation: The Project should deposit $174,928 into the residual receipts account. Additionally, procedures should be followed to ensure management identifies the need for required deposits. Auditor noncompliance code: B - Failure to make required residual receipts deposits.