Finding Text
Finding No. 2023-001: Residual Receipts Deposit (Material Weakness)
Statement of condition
Special Tests and Provisions
The residual receipts reserve was not properly funded at June 30, 2023.
Criteria
The Regulatory Agreement requires that any surplus cash amount be deposited into a residual receipts reserve and retained until released as approved by HUD.
Cause
Review procedures were insufficient to ensure that a surplus cash deposit from fiscal year 2021 was deposited into the reserve, resulting in the residual receipts reserve being underfunded at June 30, 2023.
Effect
Funds required to be deposited into the residual receipts reserve could be used to fund operations or for alternative purposes without HUD's authorization.
Recommendation
Management should revisit its internal controls and procedures for the computation of surplus cash to ensure it is performed accurately and timely and that any calculated surplus cash amount be deposited into the residual receipts reserve timely.
Identification of repeat finding
The finding is a repeat of Finding No. 2022-001.
Auditor non-compliance code
B - Failure to make required residual receipts deposits
Questioned costs
None
Finding resolution status
In process