Finding Text
Finding No. 2024-006 – Special Tests and Provisions U.S. Department of Housing and Urban Development Federal Program Name: Section 202 Supportive Housing for the Elderly Assistance Listing Number: 14.157 Criteria: In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, within 30 days after the move-out date (or shorter time if required by state and/or local laws), management must either: refund the full security deposit plus accrued interest to a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of the tenant’s rights under state and local laws. Condition: In connection with the procedures applied to a sample of 7 tenants that moved out of the project during the year, we noted 2 instances where management failed to refund the tenant security deposit and/or provide the tenant with an itemized list of charges deducted from the deposit within thirty days after the move-out date. Cause: Management did not have procedures in place regarding timely refunding of tenant security deposits which require refunds or notice to occur within the 30-day requirement established by HUD. Effect or Potential Effect: Management failed to comply with the HUD occupancy requirement to timely refund the tenant security deposits or to provide the tenant with a list of charges. Questioned Costs: None Context: Management did not have monitoring procedures in place to ensure timely refunding of tenant security deposits to the tenant or to their estate. Identification as a Repeat Finding: No Recommendation: Management should change its policies and procedures related to refunding of tenant security deposits to comply with the thirty-day timeline required by HUD regulations. Auditor Noncompliance Code: M – Security Deposits Finding Resolution Status: In process Views of Responsible Officials: Management will review the processes and procedures with site personnel to strengthen controls over the refunding of tenant security deposits.